Sam Bankman-Fried: The $8 Billion Fraud

On 2 November 2023, a jury in Manhattan took less than five hours to decide that Sam Bankman-Fried, the founder of the crypto exchange FTX, was guilty on all seven counts of fraud and conspiracy. A year earlier he had been worth, on paper, around $26 billion, had testified to Congress, and had been one of the biggest political donors in America. Prosecutors told the jury he had taken about $8 billion of his customers' money.

He was sentenced to 25 years. On 12 June 2026 a federal appeals court upheld every part of the verdict. He is now asking the Supreme Court to hear his case and has applied to President Donald Trump for a pardon, which the White House has said Trump does not intend to give.

The golden boy

Bankman-Fried, the son of two Stanford law professors, studied physics at MIT and traded at the Wall Street firm Jane Street before starting Alameda Research, a crypto trading firm, in 2017. In 2019 he launched FTX, an exchange where customers could buy and sell cryptocurrencies, much as they would buy shares through a broker. By January 2022 investors valued FTX at $32 billion.

He played the part of the unworldly genius: cargo shorts, messy hair, a beanbag in the office, and a stated plan to give his fortune away under effective altruism, a movement about doing the most good with money. FTX bought the naming rights to the Miami Heat's arena, signed Tom Brady and Larry David for adverts, and moved its headquarters to the Bahamas. Bankman-Fried lobbied Washington for crypto rules and gave tens of millions of dollars to candidates.

How the money moved

The basic promise of an exchange is that customer deposits stay the customers'. At FTX they did not. Alameda had special treatment written into FTX's code: it could run a negative balance without being automatically closed out, and it had what FTX co-founder Gary Wang testified was a $65 billion line of credit. Customer dollars sent to FTX were often paid into bank accounts controlled by Alameda. Alameda then spent the money on trading losses, venture investments, property in the Bahamas, loans to executives and political donations.

Much of the hole was papered over with FTT, a token FTX created itself, something like a company issuing its own loyalty points and then counting them as assets. On 2 November 2022, the news site CoinDesk published Alameda's balance sheet, showing that a large share of its $14.6 billion in assets was FTT and other tokens tied to Bankman-Fried's companies. On 6 November Changpeng Zhao, the head of the rival exchange Binance, said Binance would sell its FTT holdings. Customers rushed to withdraw, a classic bank run, and pulled about $6 billion in 72 hours. Binance offered to buy FTX on 8 November and walked away a day later. On 11 November 2022, FTX filed for bankruptcy and Bankman-Fried resigned. That night, hundreds of millions of dollars more were drained from FTX wallets in a separate theft.

Arrest and trial

Bahamian police arrested Bankman-Fried on 12 December 2022, the day before he was due to testify to Congress. He was sent to the United States and released on a $250 million bond to live at his parents' home in Palo Alto. Judge Lewis Kaplan jailed him in August 2023 after finding he had tried to influence witnesses, including by sharing private writings of Caroline Ellison, his former girlfriend and Alameda's chief executive, with The New York Times.

The trial began on 3 October 2023. Ellison, Wang and FTX engineering chief Nishad Singh all pleaded guilty and testified against him. Bankman-Fried took the stand himself and said he had made mistakes but committed no fraud. The jury disagreed. On 28 March 2024 Judge Kaplan sentenced him to 25 years and ordered him to forfeit $11 billion, saying there was a risk he would do something very bad in the future and that he had never shown real remorse.

Appeals, pardons and the money

His appeal argued that Judge Kaplan had wrongly stopped the jury hearing that FTX had enough assets to repay customers. On 12 June 2026 a three-judge panel of the Second Circuit rejected that and every other argument, describing the evidence against him as, conservatively stated, robust. The court said fraud is complete when money is obtained by lying, even if the person meant to pay it back. On 10 September 2026 he petitioned the Supreme Court, challenging the evidence rulings and the $11 billion forfeiture. The government has until 16 November to respond. The court agrees to hear only about 1% of such petitions.

He has also courted Trump. Trump said in a January 2026 interview with The New York Times that he was not considering a pardon, and a White House spokesperson repeated in February that he had no intention of giving one. A pardon application was filed in June 2026. Bankman-Fried is held at a low-security federal prison near Santa Barbara, California, and is not due for release until 2044.

The customers have done better than he has, partly thanks to the crypto market. Under John J. Ray III, the restructuring expert who took over FTX in bankruptcy, the estate recovered billions by selling investments, including a stake in the AI company Anthropic. Claims were valued in dollars at November 2022 prices, when bitcoin was worth about $17,000, which angered customers who had held coins that later rose many times over. Repayments began in February 2025. After a fourth payout of about $2.2 billion on 31 March 2026, US customers had received 100% of their claims and international customers 96%. A fifth round of about $900 million followed on 31 July 2026, taking total payouts to roughly $10 billion or more.