Here are the arguments that, according to former CEO Sam Bankman-Fried, should convince the U.S. Supreme Court to reconsider the fraud case that landed him in prison and obligated him to pay billions of dollars.
The court had no right to consider evidence that FTX customers lost funds when Bankman-Fried transferred their money to his investment firm Alameda Research. Furthermore, the order to recover $11 billion from him seems unfair, condemning him to perpetual financial bondage.
The former industry leader, who acted as a prominent defender of cryptocurrencies before his downfall in 2022, has so far failed to get the conviction overturned in lower courts, forcing his lawyers to turn to the last possible instance—the country's Supreme Court. If Bankman-Fried fails to attract the court's attention or is denied, it will likely be the final point in this case, while the former "wunderkind" serves the remainder of his sentence (he was sentenced to a total of 25 years in prison for fraud).
Bankman-Fried's lawyers have formally petitioned the Supreme Court to review the decision of the lower federal court. Most such petitions are not accepted for consideration.
His lawyers argue that the Second Circuit Court of Appeals—which ruled in June that the trial judge made reasonable decisions regarding the admissibility of evidence—effectively permitted the use of testimony that customers "lost large sums of money," while not allowing Bankman-Fried to "refute this claim—that is, to prove that there were always more than enough assets to settle with customers (and ultimately they got their funds back, with significant interest)."
The court document also notes that "the appellate court's approval of a massive fine in this case" deserves the Supreme Court's attention, as constitutional provisions prohibiting excessive fines "embody a historic guarantee—dating back to the Magna Carta—that fines should not deprive offenders of their livelihood."
Previously, the Supreme Court could have become the instance determining the legal status of cryptocurrencies as securities, but related lawsuits were either dismissed or settled after federal agencies were headed by regulators favorably disposed to the industry. Now, the court's attention is focused on two current issues in the digital asset sphere: whether state gambling laws apply to prediction markets (and whether these norms can regulate the rapid development of this industry based on financial bets) and what will be the legal fate of Bankman-Fried?
The former cryptocurrency company executive, who previously funded Democratic Party candidates, now actively supports President Donald Trump's economic and military initiatives in his posts on X. He had hoped for a pardon from the president, who had previously revoked punishments for several other figures in the cryptocurrency industry, but Trump openly ruled out the possibility of helping Bankman-Fried.
In its decision issued this year, the Second Circuit Court of Appeals made it clear that the judges viewed the former company head's actions as clear fraud.
"The fact that some FTX customers voluntarily engaged in margin trading and thereby temporarily lost access to their funds is not material to the essence of the case," noted the panel of judges. "Some chose margin trading, some did not. But no one consented to the transfer of their money to Alameda under false pretenses."
For all judges who previously considered the case, the question of whether these investments brought profit or loss was not decisive.
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