Second Circuit Affirms Bankman-Fried Fraud Conviction

The U.S. Court of Appeals for the Second Circuit unanimously affirmed the conviction of Samuel Bankman-Fried, the founder of FTX, on seven counts of fraud and conspiracy arising from the collapse of the digital-asset exchange and Alameda Research, its affiliated trading firm.

The three-judge panel upheld the district court's judgment, rejecting each of his challenges, including those to evidentiary rulings, jury instructions, the scope of the government's disclosure obligations, and an approximately $11 billion forfeiture order. Applying the Supreme Court's decision in Kousisis v. United States, the court held that federal fraud statutes do not require proof that a defendant intended to cause victims a net financial loss. The panel found no abuse of discretion in the district court's exclusion of evidence regarding the eventual appreciation of the defendant's investments or his stated intent to repay customers, holding that such evidence was properly excluded as legally immaterial to fraudulent intent.

The panel also upheld the district court's willfulness instruction, which defined willful conduct as acting voluntarily and with a wrongful purpose, and held that the government did not have to prove Bankman-Fried knew his conduct was unlawful, only that he was aware of its general wrongfulness. That objection was preserved only as to the counts of securities-fraud conspiracy and commodities-fraud conspiracy; Bankman-Fried consented to the same definition for the two counts of wire fraud. The panel also approved the district court's good-faith instruction, which applied to all counts.

The panel also upheld the $11 billion forfeiture order, holding that it was authorized under federal forfeiture statutes as an in personam money judgment and did not violate the Eighth Amendment's Excessive Fines Clause.