Sam Bankman-Fried’s Pardon Desperation Deepens as Second Circuit Denies Appeal of 25-Year Prison Sentence

The denial of the imprisoned crypto mogul Sam Bankman-Fried’s appeal of his quarter century prison sentence is a crushing blow to the FTX founder’s hopes — and leaves an unlikely presidential pardon as his final path to freedom.The decision came from a unanimous three-judge panel of the Second United States Appeals Circuit, which found that the government’s case against Mr. Bankman-Fried “was, conservatively stated, robust.” He was asking for a new trial and a reversal of the $11 billion in asset forfeiture ordered following seven convictions — on every count — for fraud and conspiracy. The panel concurred with both the jury and the trial judge, Lewis Kaplan. The circuit riders write that “While Mr. Bankman-Fried “was publicly reassuring customers, investors, and regulators that FTX customer funds were safe, he was simultaneously using FTX as his own personal piggy bank, spending customer funds on real estate, political contributions, and investments.”Prosecutors at the Southern District of New York accused Mr. Bankman-Fried of authoring “one of the biggest financial frauds in American history.” He has argued that FTX was not insolvent but was merely suffering a liquidity crisis precipitated by a bank run instigated by a rival platform, Binance. FTX’s holdings in companies like Anthropic, SpaceX, and Cursor would have been at least $100 billion today. FTX’s court-appointed post-bankruptcy chief executive, John Ray III, has shrugged aside those farsighted positions, declaring that “we were not a long-term hedge fund. We were a company that had hundreds of thousands of creditors worldwide.”The panel that affirmed Mr. Bankman-Fried’s convictions included Judge Barrington Parker Jr. — an appointee of President George W. Bush — and Judges Eunice Lee and Maria Araújo Kahn, both appointees of President Biden. The unanimous decision finds that Mr. Bankman-Fried “was the driving force behind a fraud in which he misappropriated billions of dollars from customers and investors.”The panel writes that it is bound by a Supreme Court decision from last year that held that “a defendant commits federal fraud whenever he uses a material misstatement to trick a victim into a contract that requires handing over her money or property — regardless of whether the fraudster, who often provides something in return, seeks to cause the victim net pecuniary loss.” That means that it is no defense to fraud to say that FTX’s investors would have been made whole and then some.The Second Circuit accepts the jury’s conclusion that while Mr. Bankman-Fried “assured customers, investors, regulators and the public that FTX customer funds were safe, he transferred billions of dollars from FTX customer accounts to Alameda and elsewhere. He then used those funds to make investments unrelated to FTX customer deposits, to cover Alameda’s losses, to make political contributions, to acquire personal real estate, and to underwrite a lavish lifestyle, all while falsifying business records in order to conceal these transactions.”The Second Circuit also pushes back against the accusation that Judge Kaplan was biased against Mr. Bankman-Fried. The appellate judges note that the “trial lasted a month, and nearly every day of trial sophisticated counsel on both sides lodged objections of one sort or another.” Besides, the circuit riders determine, trial judges are afforded “considerable latitude in superintending trial proceedings and in admitting or excluding evidence so the trial can proceed fairly and efficiently.”Mr. Bankman-Fried’s next move is likely to ask the full Second Circuit to hear his appeal. The circuit, though, is under no obligation to grant such en banc consideration. The next appellate stop after an en banc hearing would be the submission of a writ of certiorari to the Supreme Court, which is likewise under no obligation to take the case. That leaves a presidential pardon. Mr. Trump told reporters in January that he has no intention of issuing one to Mr. Bankman-Fried, who had donated tens of millions of dollars to Democratic political candidates. Mr. Bankman-Fried, though, has said that he “absolutely” wants a pardon. Earlier this week he applied to the Department of Justice for a “pardon after completion of sentence,” which would only kick in when his tenure in prison is over, in some 23 years.

Sam Bankman-Fried’s Pardon Desperation Deepens as Second Circuit Denies Appeal of 25-Year Prison Sentence

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