Overview
- Sam Bankman-Fried has filed a request with the Supreme Court seeking to reverse his fraud conviction, which resulted in a 25-year prison sentence.
- His petition emphasizes the urgent need for review, following the Second Circuit's confirmation of his conviction in June.
- In addition, he has sought a pardon from President Trump, a move that has met with unanimous opposition from the Senate.
FTX's founder, Sam Bankman-Fried, is appealing to the Supreme Court to reverse his fraud conviction, which sentenced him to 25 years in prison, according to a petition obtained by the New York Times.
The chances of success appear slim. The Supreme Court reportedly hears and decides on about 1% of cases submitted each term, as stated by the court itself, and the review process is discretionary.
Bankman-Fried’s legal team contends that the trial court should have permitted him to demonstrate that no FTX customers incurred losses. They argue that there were "always more than enough assets available to repay customers (which have now been repaid with substantial interest)," describing the request for review as "urgently necessary."
However, prosecutors dispute this view. The Justice Department asserted during sentencing that Bankman-Fried orchestrated a scheme to defraud FTX customers by "misappropriating billions of dollars of those customers' funds," regardless of whether they ultimately recovered their money. The case also involved $1.7 billion fraudulently obtained from FTX investors and $1.3 billion from lenders to Alameda, neither of which were customer deposits. Repayments were made as part of FTX's bankruptcy plan, which assessed claims based on values from November 2022, at a time when Bitcoin was priced around $16,000.
The petition further criticizes the $11 billion forfeiture as an excessive penalty, violating the Eighth Amendment’s prohibition against excessive fines.
Exploring Alternative Avenues
Bankman-Fried is pursuing various options to challenge his conviction. In June, he sought clemency from U.S. President Donald Trump, and the Office of the Pardon Attorney currently lists this request as pending. It is categorized as a "pardon after completion of sentence," an unusual classification for someone who has over two decades left to serve.
This route to a pardon is also fraught with difficulties. Trump dismissed the possibility of a pardon in January, stating to the Times that he would not consider it, and the Senate unanimously voted against clemency in July, showcasing a rare moment of agreement in a typically divided chamber on crypto issues. Bankman-Fried was the second-largest donor to the Democrats, contributing nearly $40 million in the 2021-22 election cycle, following only George Soros, according to OpenSecrets.
Founded in 2019, FTX grew to a valuation of $32 billion, bolstered by stadium naming rights and celebrity endorsements. The platform collapsed during a liquidity crisis in November 2022, after revelations that customer funds had been used to cover losses at his trading firm, Alameda Research. Bankman-Fried was arrested in the Bahamas in December and subsequently convicted in the following year after a month-long trial in Manhattan. The Second Circuit Court upheld his conviction in June.
Maintaining his innocence, Bankman-Fried withdrew an earlier motion for a new trial this year.
As of now, the Supreme Court has not indicated whether it will take on the case.