What happened
On 12 June 2026 the Second Circuit affirmed the conviction and sentence of Sam Bankman-Fried, ending its opinion in one line: "We AFFIRM the judgment of the district court" (United States v. Bankman-Fried, No. 24-961-cr). Judges Parker, Lee and Kahn heard argument on 4 November 2025.
A jury convicted on 2 November 2023 on all seven counts that were tried: two of wire fraud, two of wire fraud conspiracy, and one each of conspiracy to commit securities fraud, commodities fraud and money laundering. Campaign finance, foreign bribery, bank fraud and unlicensed money transmitting counts were dropped from the tried indictment under Bahamian extradition specialty, and prosecutors said on 29 December 2023 there would be no second trial. Judge Lewis A. Kaplan sentenced on 28 March 2024: 25 years, three years of supervised release, and forfeiture of 11,020,000,000 dollars.
What it changes
If the creditors are paid, where is the fraud? The court holds that this was never the test: "the government did not need to prove intent to cause economic loss", so the defendant's belief that customers would be repaid is "immaterial as a matter of law". The governing rule is Kousisis v. United States, decided 22 May 2025, after this trial, and it reaches back because the case was still open on direct review, where Harper v. Virginia Dep't of Taxation makes a new reading of federal law controlling. Federal fraud is complete at the moment of the misrepresentation-induced transfer. Three things follow.
Timing. Customers "were defrauded as soon as Bankman-Fried transferred their money to Alameda regardless of how strongly he believed he might later return the money", and whether what he bought with it appreciated is irrelevant to guilt. A solvency-versus-liquidity story is a defence to nothing.
Units. A bankruptcy estate repays in petition-date fiat currency, so "100 percent recovery" and "made whole" are different claims. A bitcoin depositor paid at November 2022 prices was not made whole in the only unit that mattered to them.
Denominators. Sentencing loss counts what victims lost, forfeiture counts what the defendant gained, restitution counts something else again, and the three do not reconcile. The court upheld the forfeiture on gross proceeds rather than net, and as no excessive fine, even for a scheme whose victims may be made whole, because it is measured by gains and not by moral culpability.
What it does not change
It recovered no coins. The forfeiture is punitive and joint and several, it does not shrink as the estate recovers, and it is not restitution: none of it is what depositors get.
It does not change the units either, because no criminal outcome converts a petition-date dollar claim back into bitcoin. Nor the clock: sentencing to affirmance took 26 months on top of the bankruptcy, so criminal law is no recovery mechanism on a depositor's schedule.
And it changes nothing technical about an exchange. The doctrine would read the same had FTX recovered nothing, and no proof-of-reserves scheme or regulator that existed in 2022 is improved by it. What was never a claim on anybody is a coin held under keys its owner controls: "not your keys, not your coins", from the legal side rather than the technical one.
Context
When FTX filed we wrote that being made whole in a bankruptcy means whole in dollars on the court's date, which for a bearer asset is not whole at all. A pardon application filed on 8 June 2026, seeking a pardon after completion of sentence, is pending.
The argument rejected today was rejected once already. At sentencing (S.D.N.Y. No. 22-cr-673) Kaplan found loss above the top Guidelines band, roughly 8 billion dollars of it to FTX customers, and answered the same claim: "A thief who takes his loot to Las Vegas and successfully bets the stolen money is not entitled to a discount on the sentence by using his Las Vegas winnings to pay back all or part of what he stole." Today that stops being one judge's answer and becomes the law of the circuit.