FTX Founder Sam Bankman-Fried Appeals Fraud Conviction to U.S. Supreme Court

Key Points of This Article

• Is this the last legal recourse left to appeal to the Supreme Court?
• The presidential pardon is currently "under review"

Appeal Against Conviction to the Supreme Court

Sam Bankman-Fried, the founder and former CEO of the collapsed cryptocurrency exchange FTX, filed a petition on the 10th to the U.S. Supreme Court seeking to overturn his conviction for fraud. Reports from the New York Times and others indicate that this is seen as the last legal option available to the defendant, who is currently serving a 25-year prison sentence.

Mr. Bankman-Fried was sentenced to 25 years in prison in 2024 by a district court on seven counts related to fraud, conspiracy, and money laundering. He appealed the verdict, but in June of this year, the appellate court upheld the district court's conviction, and in August, that ruling was finalized.

As a result, the only legal recourse left for Mr. Bankman-Fried was to petition the Supreme Court for a "writ of certiorari." A writ of certiorari is a form of appeal where the parties do not have a guaranteed right to a hearing.

According to publicly available data from the U.S. Supreme Court, only about 1% of cases presented in this form are actually heard each term.

Contents of the Petition

Mr. Bankman-Fried's legal team has filed this petition for a writ of certiorari, arguing that a hearing is "urgently needed." They claim that the court unjustly prohibited the submission of evidence showing that FTX customers had not actually incurred losses.

Specifically, they argue that "FTX and Alameda Research were merely temporarily lacking liquidity and always held sufficient assets to make final payments to both investors and customers."

Furthermore, they stated, "There were always sufficient assets for customer repayments, and in fact, repayments have already been completed with interest." They also argue that the order to forfeit approximately $11 billion (about 1.7 trillion yen) in assets against Mr. Bankman-Fried constitutes a "harsh penalty" that violates the constitutional prohibition against excessive fines.

Mr. Bankman-Fried's side had made similar arguments during the appellate trial. However, the appellate judges dismissed these, stating that "wire fraud" could be established even without the intent to cause economic harm. They also reiterated concerns about the unauthorized diversion of customer funds to sister company Alameda Research, thereby supporting the first trial's ruling.

Regarding the claims about asset forfeiture, the appellate court interpreted the federal forfeiture law, which states that the forfeiture amount is calculated based on the profits obtained from criminal activities, and rejected Mr. Bankman-Fried's arguments.

The repayment rate to former FTX customers varies by class but is generally around 100% to 120% of the principal. However, repayments to customers are not made in cryptocurrency but in amounts equivalent to U.S. dollars as of November 2022. Therefore, creditors have not benefited from the significant rise in cryptocurrency prices over the past few years.

Exploring the Possibility of a Presidential Pardon

As an alternative to the court proceedings, Mr. Bankman-Fried applied for a pardon from President Donald Trump in June. Records from the U.S. Department of Justice's Office of the Pardon Attorney indicate that this application is still "under review."

It should be noted that the application is for a "pardon after the completion of the sentence" and does not seek immediate release. Therefore, even if granted, Mr. Bankman-Fried's civil rights would only be restored after his sentence is completed.

However, the path to a pardon is also seen as difficult. President Trump himself indicated in January that he would not consider a pardon for Mr. Bankman-Fried, and in July, the U.S. Senate unanimously adopted a resolution opposing any pardon or commutation for him.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.