Victim Restitution Won't Absolve Crime, Judges Tell SBF

Sam Bankman-Fried's legal team faces an uphill battle in its bid to overturn the former FTX CEO's 25-year prison sentence, as federal appeals judges in New York expressed skepticism during a hearing Tuesday. The panel, comprising Judges Barrington Parker, Eunice Lee, and Maria Araujo Kahn, questioned the validity of the defense's arguments that the trial was unfair and that Bankman-Fried lacked fraudulent intent, as reported by Coinotag. The hearing highlighted the challenges of challenging a conviction built on overwhelming evidence of financial misconduct, MarketBeat noted.

Bankman-Fried's attorney, Alexandra Shapiro, argued that the trial judge, Lewis Kaplan, restricted the defense's ability to present evidence about legal advice received and FTX's solvency. She claimed the jury was misled about the exchange's ability to repay victims, asserting that the trial was "fundamentally unfair," according to CNBC. However, the judges swiftly challenged these claims. Judge Parker noted that Bankman-Fried himself testified he did not rely on legal counsel when siphoning billions from FTX to its sister firm, Alameda Research, undermining the defense's argument. Judge Lee further questioned the relevance of FTX's eventual repayment of funds, stating, "Victim restitution does not negate criminal liability," as reported by CoinDesk.

The defense also emphasized that FTX's bankruptcy proceedings have recovered over 90% of customer funds, a fact the jury was allegedly barred from hearing, according to a Coinotag post. However, the judges dismissed this as a non-legal defense. Judge Parker remarked, "The jury should have had the full picture. And yet, Mr. Bankman-Fried sits in prison," Shapiro argued, but the panel's tone suggested little sympathy for appeals based on post-trial financial outcomes, MarketBeat observed.

The case has broader implications for the crypto industry, which has faced heightened regulatory scrutiny since FTX's 2022 collapse. Bankman-Fried's conviction on seven counts of fraud and conspiracy has set a precedent for accountability in decentralized finance. Legal experts note that appeals in white-collar crime cases rarely succeed without clear procedural errors, a threshold not met here, Coinotag reported. The appeals court is expected to rule on the matter at a later date.

Meanwhile, FTX's ongoing bankruptcy proceedings have seen the exchange withdraw a controversial proposal to block repayments to users in 49 countries, including China, after widespread backlash, Coinpedia reported. The decision to retract the "Restricted Jurisdiction Procedure" followed objections from creditors, who argued it was discriminatory and violated bankruptcy principles of fairness.

As the crypto sector grapples with regulatory uncertainty, Bankman-Fried's case underscores the risks of centralized control and the growing emphasis on transparency. The appeals court's potential rejection of his arguments could reinforce the legal framework for holding crypto executives accountable, shaping future prosecutions in the space, CNBC noted.