Sam Bankman-Fried loses his FTX bankruptcy appeal in the US Second Circuit

The US Court of Appeals for the Second Circuit in Manhattan rejected Sam Bankman-Fried’s challenge to his conviction, leaving in place the 25-year prison sentence tied to the collapse of FTX in 2022. For high-risk payment and crypto operators, the interesting part is not the celebrity factor: it is the court’s confirmation that client funds were treated as a corporate and personal funding source while customers, investors, and regulators were told their money was safe.

1. The three-judge panel denied Bankman-Fried’s request to overturn the verdict. The court said the prosecution’s case was persuasive and upheld the lower court’s findings that he used FTX as a personal wallet while publicly assuring customers, investors, and regulators that funds on the exchange were secure.
2. The appeal also reinforced the findings that customer money was used to buy real estate, make political donations, and fund outside investments. In practice, that is the kind of fact pattern that destroys trust with banks, acquirers, and PSPs because it turns safeguarding claims into a forensic question.
3. In November 2023, Bankman-Fried was found guilty on seven counts of conspiracy and fraud. Prosecutors proved in court that he diverted customer funds to cover company losses, financed personal spending, and supported risky operations at Alameda, the trading firm tied to FTX.
4. The losses cited in the case are large enough to matter beyond the courtroom: FTX customers lost about $8 billion, investors lost $1.7 billion, and creditors of Alameda Research, the fund founded by Bankman-Fried, lost $1.3 billion.
5. In early June, Bankman-Fried submitted a clemency request to the US Department of Justice’s Office of the Pardon Attorney addressed to President Donald Trump. In a recent Fox Business interview, he said he was “absolutely” counting on a pardon, while Trump told The New York Times in January that he did not plan to pardon him.

He also filed a motion in February seeking a judge change and a new trial, arguing that testimony from two former FTX executives was not heard and could have affected the outcome. He later withdrew that motion in late April after prosecutors suspected his mother of document tampering.