FTX Founder Seeks Reversal of 25-Year Prison Sentence and Fraud Conviction

Lawyers representing Sam Bankman-Fried (SBF), the founder of now-defunct crypto exchange FTX, have filed an appeal notice, seeking to reverse his fraud conviction and 25-year prison sentence.  

According to a Bloomberg report, the notice of appeal was filed yesterday in the Manhattan-based Second Circuit Court of Appeals by the head of SBF’s defense team, Alexandra Shapiro. 

FTX co-founder Sam Bankman-Fried will appeal his conviction and 25-year prison sentence for committing a multibillion dollar fraud at his once-thriving cryptocurrency exchange. https://t.co/nMpVyX9Q8f

— Bloomberg Markets (@markets) April 11, 2024

Notably, the appeal will be presided over by a three-judge panel, who will decide whether or not to overturn the decision issued two weeks ago by U.S. District Judge Lewis Kaplan.  

Sentencing and Appeal Process

For the uninitiated, Judge Kaplan sentenced SBF to a 25-year prison term on March 28, 2024. Although the sentence was shorter than the 40 to 50-year range prosecutors sought, it was far greater than the defense team’s recommendation of no more than six and a half years. 

In addition, Judge Kaplan also ordered SBF to pay a whopping $11 billion in forfeiture for the massive fraud at FTX and its sister hedge fund, Alameda Research.

The appeal process could linger for several months to years as the defense team hopes to get a reduced prison sentence for SBF. However, several legal counsels think it would be difficult to convince the Second Circuit to reverse the District Court’s decision.

Some speculate that the odds of winning a successful reversal are less than 10%. Upon the commencement of the appeal litigation, SBF’s lawyers are expected to bolster their arguments to get a favorable outcome for their client. 

However, if SBF’s lawyers fail to secure a favorable verdict at the Second Circuit, they may take the case to the U.S. Supreme Court. 

SBF Legal Woes 

Recall that Bankman-Fried was found guilty of all seven criminal charges in November 2023. The charges relate to the misappropriation of around $10 billion worth of FTX customers’ money, which eventually led to the exchange’s collapse. 

Prosecutors said Bankman-Fried used customers’ money to finance his lavish lifestyle, fund political donations, and repay loans obtained by Alameda Research. In contrast, SBF argued that the exchange lost billions of customers’ funds due to a liquidity crisis. 

During his sentencing, Judge Lewis Kaplan said there is a risk that SBF would “do something bad in the future,” adding that the FTX founder has not been remorseful for his crimes. 

Whether the Second Circuit will uphold Judge Kaplan’s decision or reverse the ruling remains to be seen.