Bankman-Fried appeals FTX fraud conviction, 25-year sentence

The 32-year-old former billionaire crypto wunderkind was convicted in November on seven counts of fraud and conspiracy in what federal prosecutors have called one of the biggest financial frauds in U.S. history.

Updated - April 12, 2024 11:54 am IST

Published - April 12, 2024 11:25 am IST - NEW YORK

Former FTX Chief Executive Sam Bankman-Fried. File.

Former FTX Chief Executive Sam Bankman-Fried. File. | Photo Credit: Reuters

Sam Bankman-Fried, facing the prospect of spending much of his adult life behind bars, on April 11 appealed his conviction and 25-year prison sentence for stealing $8 billion from customers of the now-bankrupt FTX cryptocurrency exchange he founded.

Defence lawyer Marc Mukasey had announced plans for the appeal to the Manhattan-based 2nd U.S. Circuit Court of Appeals during Bankman-Fried's March 28 sentencing hearing. The 32-year-old former billionaire crypto wunderkind was convicted in November on seven counts of fraud and conspiracy in what federal prosecutors have called one of the biggest financial frauds in U.S. history.

Also Read | What does Sam Bankman-Fried’s sentencing mean for crypto? | Explained

Bankman-Fried's appeal could take years. He faces steep odds, with his lawyers needing to persuade the 2nd Circuit - and potentially the U.S. Supreme Court - that U.S. District Judge Lewis Kaplan made significant errors that deprived Bankman-Fried of his legal rights and made the trial unfair.

The sentence imposed by Judge Kaplan was shorter than the 40- to 50-year term that prosecutors had recommended but longer than the 5-1/4 years or fewer that Mukasey had suggested.

Bankman-Fried's sentencing put an exclamation point on his downfall from an entrepreneur whose meteoric rise prompted adulation, reverence and jealousy from some quarters into the biggest trophy for U.S. prosecutors in their crackdown on excesses in the cryptocurrency markets.

Also Read: Explained | The FTX fallout and what’s next for crypto?

The Massachusetts Institute of Technology graduate rode a boom in the values of bitcoin and other digital assets to a $26 billion net worth before he turned 30, Forbes magazine estimated.

Bankman-Fried also became a major political donor and an advocate of effective altruism, a movement that encourages talented young people to focus on earning money and giving it away to worthy causes.

His wealth evaporated when Bahamas-based FTX declared bankruptcy in November 2022 following a wave of withdrawals by customers panicking over reports that Bankman-Fried commingled their assets with Alameda Research, a crypto-focused hedge fund he also controlled.

Three former close associates testified as prosecution witnesses against Bankman-Fried, saying he ordered them to use FTX funds to pay Alameda's debts, make political donations and buy luxury real estate in the Bahamas. They pleaded guilty to fraud and are awaiting sentencing.

Bankman-Fried testified in his own defense, acknowledging he made mistakes managing risk but denying he stole money.

"I made a series of bad decisions," Bankman-Fried said at his sentencing hearing. "They weren't selfish decisions. They weren't selfless decisions. They were bad decisions."

His lawyers have complained that prosecutors worked too closely with FTX's bankruptcy estate, and asked it to hand over only information that would help their case.

During the sentencing hearing, Mr. Mukasey told Mr. Kaplan that the judge should ignore the prosecution's claim that FTX customers had lost $8 billion because, he said, customers would likely be made whole eventually. Kaplan dismissed that as speculative, and said Bankman-Fried lied by testifying he did not know until shortly before FTX's collapse that Alameda had spent large sums of customer money.

"He was viewing the cost of getting caught, discounted by probability or improbability, against the gain of getting away without getting caught, given the probabilities. That was the game," Kaplan said of Bankman-Fried.

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