FTX Founder SBF Requests Supreme Court Rehearing
FTX founder Sam Bankman-Fried has submitted a petition to the U.S. Supreme Court seeking to overturn his conviction, obtain a rehearing, and rescind the approximately $11 billion forfeiture order.
The petition argues that the forfeiture constitutes an "overwhelming penalty," violating the Eighth Amendment's prohibition on excessive fines; it also raises technical objections regarding the evidence presented in the original trial: the prosecution charged him under a "fraudulent inducement" theory, which, according to the 2025 Kousisis case, does not require proof of net monetary loss to the victim. The defense contends that the prosecution should not be allowed to introduce loss evidence and should be permitted to present materials showing that clients ultimately did not incur losses, that assets were always sufficient for repayment, and that they have now repaid both principal and interest. Senior Supreme Court attorney Jeffrey Fisher raised similar concerns about this evidentiary structure: since loss is not an element of the offense, introducing loss evidence would become prejudicial and distracting.
In 2023, a Manhattan federal jury convicted him on seven counts of fraud and conspiracy. In March 2024, Judge Lewis Kaplan sentenced him to 25 years in prison, three years of supervised release, and an approximately $11 billion forfeiture. The prosecution accused him of diverting customer funds from the exchange to his controlled Alameda Research for high-risk investments, political donations, and personal expenses; when FTX collapsed in November 2022, there was a shortfall of about $9 billion, with customers, investors, and creditors collectively short over $11 billion. On June 12, 2026, a three-judge panel of the Second Circuit Court of Appeals unanimously upheld the original ruling, with Barrington Parker stating that the prosecution's evidence was "conservatively sufficient" and clarifying that post-factum asset appreciation is irrelevant to whether fraud occurred; on August 4, an enforcement order was issued, returning the case to the district court, with the 25-year sentence remaining in effect.
The defense also attacked Kaplan for limiting attorney opinion defenses, requiring him to rehearse testimony outside the jury, incorrectly instructing the jury, and restricting potential exculpatory materials, all of which were rejected. The Second Circuit acknowledged the $11 billion amount is substantial and many victims may ultimately be compensated, but still believed Congress tied forfeiture to the defendant's gains rather than moral culpability, and the court is bound by statutory law. The Supreme Court accepts a very low percentage of petitions for certiorari each year, and the Second Circuit has determined there were no reversible errors. Bankman-Fried has also applied to the pardon office for clemency after serving his sentence, but Trump has publicly stated he does not intend to grant it; Senators Cynthia Lummis and Ruben Gallego subsequently introduced a resolution opposing clemency.
The buyers are the prosecutors and bankruptcy trustees aiming to establish a precedent for conviction and forfeiture, while the sellers are the defendants, who have relinquished control and claim they cannot repay the $11 billion judgment. Funds are flowing along two tracks: criminal forfeiture is tied to "gains," while bankruptcy repayment is based on asset recovery for creditors, with FTX creditors having entered multiple rounds of repayment. Beneficiaries include creditors who have received distributions and the prosecution's theory that separates the elements of fraud from net losses; the one under pressure is the defendant himself—customer repayments do not automatically cancel forfeiture, as the court defines fraud in terms of inducing the transfer of property, not whether the final accounts balance out.
Source: Public Information
ABAB AI Insight
Bankman-Fried's legal strategy has shifted from "I didn't defraud" to "even if I did, the accounts are settled." During the trial, he was criticized by Kaplan for perjury, splitting hairs, and dodging questions; now, on appeal, he is invoking Kousisis: the Supreme Court ruled in 2025 that inducing someone to transfer property through significant false statements constitutes fraud without needing to prove net losses to the victim. He is now reversing the same precedent—since loss is not an element, loss evidence should not be admitted to the jury, but repayment evidence should. This rewrites the element of the offense litigation into an evidence exclusion litigation.
The capital path has long been separated from criminal liability. After FTX's debtors took over, they distributed recoverable assets with interest to customers according to bankruptcy procedures, while criminal forfeiture remains tied to the defendant's $11 billion judgment under statutory law. The two tracks are deliberately not reconciled: civil restitution serves victims, while criminal forfeiture serves punishment and deterrence. The clemency application represents a third track, turning judicial finality into political discretion; the congressional resolution opposing it indicates this route is also blocked. Money flows out from Alameda's venture capital, real estate, and political donations, and attempts to flow back through bankruptcy recovery and forfeiture judgments, with the costs being time, legal fees, and the pricing power of the "effective altruism" brand.
Similar structures have repeatedly emerged after Enron and Madoff: filling the hole afterward cannot retroactively remove the fraud label. Madoff's liquidation office also sought to repay as much as possible, but the prison sentence and forfeiture were not rewritten as civil defaults. After Kousisis incorporated this logic into the Supreme Court opinion, the most commonly used defense in white-collar cases—"in the end, no one lost money"—was stripped of its backbone. The crypto industry is transitioning from unregulated exchanges to a stage with precedents to rely on, and the Second Circuit, as the appellate court with the highest weight in financial cases, has already established the conviction template of treating "customer funds as a personal piggy bank."
This represents a regulatory change. The mechanism is: fraud is reinterpreted from a result crime to a means crime, forfeiture is reinterpreted from loss compensation to deprivation of gains, and the Eighth Amendment's excessive fines clause gives way under statutory law. Whoever controls the elements of the offense controls whether the defendant can still use the subsequent bull market and bankruptcy distributions as a defense. If the Supreme Court hears the case, the issue is not whether FTX customers have received their money now, but whether the state can still take $11 billion based on gains after the victims have been compensated.