Petition Centers on Whether Customers Lost Money
Sam Bankman-Fried has asked the U.S. Supreme Court to vacate the fraud conviction that sent him to federal prison for 25 years, according to a petition reviewed by The New York Times. The filing, submitted Thursday, asks the justices to intervene in what his lawyers call an “urgently necessary” review.
The petition follows a June ruling in which a three-judge panel of the Second Circuit Court of Appeals affirmed the conviction. The Supreme Court, by its own account, grants and hears argument in roughly 1 percent of cases filed each term, and its review is purely discretionary. The court has offered no signal on whether it will accept the case.
The legal theory at the heart of the filing is that the trial court erred by preventing Bankman-Fried from introducing evidence that no FTX customer ultimately suffered a loss. “There were always more than enough assets available to repay customers (as they now have been repaid, with substantial interest),” the petition states.
The Justice Department pushed back against that characterization at sentencing. Prosecutors told the court that Bankman-Fried directed a scheme to defraud FTX customers by “misappropriating billions of dollars of those customers’ funds,” regardless of whether repayment eventually occurred. The criminal case also encompassed $1.7 billion defrauded from FTX investors and $1.3 billion from lenders to Alameda Research, his trading firm — amounts that did not constitute customer deposits.
Customer repayments were processed under FTX’s bankruptcy plan, which set claim values in dollars as of November 2022, the month Bitcoin was trading near $16,000.
Forfeiture Order Challenged Under the Eighth Amendment
Beyond the conviction itself, the petition contests the $11 billion forfeiture order, labeling it a “crushing fine” that runs afoul of the Eighth Amendment’s ban on excessive fines.
Clemency Request Remains Pending but Faces Headwinds
The Supreme Court petition is one of several legal avenues Bankman-Fried has pursued. In June he applied to President Donald Trump for a pardon. The Office of the Pardon Attorney still lists the request as pending, filed under the category “pardon after completion of sentence” — a classification that sits uneasily for an inmate with more than two decades left to serve.
That path has its own obstacles. Trump told The New York Times in January that he would not consider a pardon. In July the Senate voted unanimously against clemency, a rare show of bipartisan agreement in a chamber otherwise fractured on crypto regulation. Bankman-Fried donated nearly $40 million during the 2021-22 election cycle, making him the second-largest contributor to Democrats behind George Soros, according to OpenSecrets.
From $32 Billion Valuation to a Manhattan Conviction
Bankman-Fried founded FTX in 2019 and scaled the exchange to a $32 billion valuation, in part through stadium naming rights and celebrity endorsements. The company collapsed in November 2022 amid a liquidity crisis, after reporting revealed that customer funds had been used to cover losses at Alameda Research. He was arrested in the Bahamas the following month and convicted in Manhattan federal court after a month-long trial. He has maintained his innocence throughout, though he withdrew a motion for a new trial earlier this year.
Why It Matters
The petition tests whether a fraud conviction can be unwound if victims are eventually made whole through bankruptcy, a question that could reshape how prosecutors and courts treat digital-asset exchange failures. For FTX creditors still waiting on full recovery under the bankruptcy plan, the outcome of the forfeiture challenge and any potential reversal would directly affect the pool of assets available for distribution. The clemency track, meanwhile, underscores how political dynamics in Washington continue to intersect with crypto enforcement.
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