Sam Bankman-Fried loses appeal to overturn 25-year crypto fraud sentence

Sam Bankman-Fried has lost his bid to erase the fraud conviction tied to FTX’s collapse, leaving intact the 25-year prison sentence he received after the exchange imploded in 2022. For high-risk payments and crypto businesses, the point is not the celebrity of the defendant; it is the court’s reminder that moving customer money into operating risk, however you label it internally, can become fraud the moment the funds are diverted.

1. On Friday, a unanimous three-judge panel of the US Court of Appeals for the Second Circuit, based in Manhattan, said the prosecution’s evidence against Bankman-Fried was, broadly speaking, solid. The court rejected the core argument from his defense that the trial judge had improperly blocked evidence supporting his claim that FTX had enough funds to cover customer withdrawals.
2. Judge Barrington Parker, writing for the panel, said Bankman-Fried was publicly assuring customers, investors, and regulators that FTX customer funds were safe while simultaneously using FTX as his personal piggy bank, spending customer money on real estate, political contributions, and investments.
3. Bankman-Fried was convicted in 2023 by a federal jury in Manhattan on seven felony counts after the spectacular collapse of FTX in 2022. Manhattan federal prosecutors said he stole $8,000 million from FTX customers to cover losses at Alameda Research, his crypto investment fund, calling it a “fraud of epic proportions.”
4. He had pleaded not guilty to the two fraud counts and five conspiracy counts he faced. At trial, he admitted making mistakes in running FTX, but testified that he never stole funds. The appeals court said that did not change the legal point: fraud occurs when a defendant deceives someone into handing over money or property, even if the defendant later intends to make the victim whole.
5. Bankman-Fried’s lawyers did not immediately respond to a request for comment. They may ask all active judges on the Second Circuit to review the case or petition the US Supreme Court. According to the Department of Justice’s Office of the Pardon Attorney, he is also seeking a pardon from President Donald Trump; neither the White House nor the Department of Justice commented immediately.

For PSPs, acquirers, and banks dealing with high-risk merchants, the useful part of this ruling is straightforward: courts are looking at what happened to customer funds, not at after-the-fact explanations about intent, recovery, or eventual reimbursement. If customer balances are being used to finance other liabilities, the legal and operational story can turn fast.