A three-judge panel of the U.S. Court of Appeals for the Second Circuit issued a unanimous ruling affirming the 2024 fraud conviction of former FTX CEO Sam Bankman-Fried (“SBF”). Bankman-Fried had appealed both the guilty verdict and the resulting 25-year prison sentence, arguing that trial evidence did not support findings of deliberate misappropriation of customer funds. The appellate court’s opinion characterized the government’s case as “conservatively stated, robust,” and highlighted internal communications showing deliberate redirection of client assets to cover losses at the Alameda Research hedge fund. Circuit Judge Barrington Parker wrote that SBF personally assured investors and customers that FTX held full reserves, even as corporate ledgers recorded significant withdrawals to fund real-estate purchases, political contributions and personal investments. The panel’s decision also addressed arguments that trial testimony from former executives was unreliable; the judges found those witnesses credible and persuasive. Bankman-Fried’s legal team indicated intent to seek rehearing en banc, while prosecutors have opposed further appeals. The outcome solidifies a landmark precedent on executive liability in digital asset platforms, signaling heightened scrutiny of fund segregation and customer protection practices. Market participants and regulators are expected to consider the ruling when evaluating governance standards for centralized exchanges and lending protocols.
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