Sam Bankman-Fried: 25-year sentence for the FTX founder, and his case is now at the Supreme Court

Sam Bankman-Fried is the founder of the crypto exchange FTX and has been serving a 25-year prison sentence since 2024. A jury in Manhattan found him guilty on seven counts in November 2023 for moving billions in FTX customer funds to his trading firm Alameda Research. In June 2026, a US appeals court upheld the verdict, and since September his petition has been with the Supreme Court. For investors in Europe the case is more than a courtroom story: it shows why a balance on an exchange is, legally, a claim against the operator, and why the EU's MiCA regulation requires customer funds to be held separately.

This overview traces Bankman-Fried's path, from celebrated founder to failed appeal. It explains how FTX customers are being repaid, why 105 percent is less than it sounds, and what the collapse teaches you about holding Bitcoin and other coins yourself. It is based on court rulings, statements from US prosecutors and the publications of the FTX Recovery Trust.

Who is Sam Bankman-Fried? From quant trader to FTX founder

Sam Bankman-Fried, known in the industry simply as SBF, grew up as the son of two Stanford University law professors and studied physics at MIT. He then traded exchange-traded funds at the trading firm Jane Street. A quant trader exploits price differences using mathematical models and automated strategies rather than gut feeling.

In 2017, Bankman-Fried founded the trading firm Alameda Research. At first it made money from the so-called kimchi premium, the fact that bitcoin traded at a higher price on South Korean exchanges than in the US. In 2019 came the crypto exchange FTX, based in the Bahamas, which specialised in derivatives such as futures and perpetuals. Within three years FTX rose to become one of the largest exchanges in the world. In early 2022, investors valued the company at $32 billion.

In public, Bankman-Fried presented himself as the opposite of the crypto fortune hunter cliché. He championed effective altruism, a school of thought that directs donations according to measurable impact, spoke to the US Congress about regulation and gave large sums to politicians of both parties. FTX bought the naming rights to a basketball arena in Miami and advertised with sports stars. That image made the later collapse all the more unexpected for many customers.

Alameda Research and FTX: how customer funds flowed to the hedge fund

The core of the case lies in the link between the exchange and the trading firm. Formally, FTX and Alameda Research were separate companies, but Bankman-Fried owned the majority of both. According to the findings of the criminal trial, Alameda enjoyed special privileges on FTX: the trading firm was allowed to run a negative balance without the system force-closing its positions, and in effect had a line of credit funded by customer deposits.

The US Attorney's Office for the Southern District of New York put the damage at around $8 billion in customer funds. According to the indictment, the money went into Alameda's losses, into real estate in the Bahamas, into venture investments and into political donations. Customers knew nothing about it. Most assumed that their deposits sat at FTX and could be withdrawn at any time.

The exchange's own token, FTT, played an important role. Alameda held large amounts of it and used it as collateral for loans. The value of that collateral depended entirely on confidence in FTX. An exchange token is a coin issued by a trading platform itself, usually offering fee discounts or other perks on that platform. When confidence in the exchange falls, the token falls with it, and so does any collateral built on it.

FTX collapse in November 2022: nine days to the bankruptcy filing

On November 2, 2022, the trade publication CoinDesk reported on an Alameda balance sheet in which a large share of the assets consisted of FTT. A few days later, Binance chief Changpeng Zhao announced that Binance would sell its FTT holdings. Customers then pulled out billions within a short time. FTX halted withdrawals, and an announced rescue takeover by Binance collapsed after one day.

On November 11, 2022, FTX, Alameda Research and around 130 affiliated companies filed for creditor protection in Delaware under Chapter 11 of the US Bankruptcy Code. Chapter 11 is a procedure in which a company is restructured or wound down under court supervision while creditors wait for an orderly distribution. Bankman-Fried stepped down as chief executive. His successor, John J. Ray III, a restructuring specialist who had previously overseen the wind-down of Enron, spoke of a failure of corporate controls unlike anything he had ever seen.

That cut-off date later became decisive for every customer. The bankruptcy process values each claim as of November 11, 2022, the day of the filing. At the time, bitcoin traded at around $17,000. What that means for today's repayment is explained further below. We have explained how customer balances are treated legally when an exchange goes bankrupt in a separate guide.

Guilty on seven counts: the 2023 criminal trial in Manhattan

In December 2022, Bankman-Fried was arrested in the Bahamas and extradited to the United States. The trial began in October 2023 before the federal district court in Manhattan under Judge Lewis Kaplan. The indictment comprised two counts of fraud and five counts of conspiracy, including conspiracy to defraud customers and lenders and to commit money laundering.

Three former confidants who had previously pleaded guilty testified against him: Caroline Ellison, head of Alameda Research, FTX co-founder Gary Wang and engineering chief Nishad Singh. Bankman-Fried himself took the stand. He admitted mistakes in running the company but denied having stolen money. On November 2, 2023, after only a few hours of deliberation, the jury found him guilty on all seven counts.

His co-defendants received much lighter sentences because they had cooperated with prosecutors. Ellison was sentenced to two years in prison in September 2024, while Wang and Singh avoided further prison time. Ryan Salame, a former FTX executive, received seven and a half years in May 2024 for illegal campaign contributions and for operating an unlicensed money transmitting business.

A 25-year sentence and $11 billion in forfeiture

On March 28, 2024, Judge Kaplan handed down the sentence: 25 years in prison and the forfeiture of around $11 billion. Forfeiture is a court order to surrender assets derived from a crime to the state. In the US, that money can flow to victims through a separate procedure. Prosecutors had asked for 40 to 50 years, the defence for no more than six and a half.

Kaplan justified the sentence by saying that Bankman-Fried had known his actions were wrong. In the judge's words, he had made a very bad bet about whether he would get caught. According to Reuters, Bankman-Fried is held in a low-security federal prison near Santa Barbara, California. If the verdict stands, Reuters reports, he will be released in 2044 at the earliest.

Appeal rejected: the Second Circuit upholds the verdict

Bankman-Fried appealed both the verdict and the sentence to the US Court of Appeals for the Second Circuit in New York. His lawyers argued that Judge Kaplan had wrongly excluded evidence showing that FTX had enough assets to repay all customers. They also argued that Kaplan had restricted the defendant's own testimony too heavily.

On June 12, 2026, a three-judge panel unanimously rejected the appeal. Judge Barrington Parker described the prosecution's evidence as robust, to put it mildly. Bankman-Fried, he wrote, had publicly assured customers, investors and regulators that their funds were safe while using FTX as his personal piggy bank.

One sentence in the ruling is decisive in legal terms: FTX customers were defrauded the moment their money flowed to Alameda, no matter how firmly Bankman-Fried believed they would later be repaid. This means it makes no difference to his criminal liability that customers are now getting back more than their dollar claims. As we had already reported in April 2024 when the appeal proceedings began, the defence was relying on exactly that argument.

Supreme Court and a pardon: Bankman-Fried's last options

On September 10, 2026, Bankman-Fried petitioned the Supreme Court to hear his case. The petition challenges the conviction and the $11 billion forfeiture, which in the defence's view violates the ban on excessive fines in the Eighth Amendment to the US Constitution. The nine justices decide at their own discretion whether to take a case. Four of them must agree, and the court accepts only around 1 percent of the petitions it receives. As of early November, no decision on the petition had been made.

There is also the political route. According to the Office of the Pardon Attorney at the US Department of Justice, as cited by Reuters in June, Bankman-Fried has asked President Donald Trump for a pardon. Whether that will happen is unclear. In 2025 Trump pardoned Binance founder Changpeng Zhao, although Zhao's conviction concerned violations of anti-money laundering rules and not fraud against customers. Neither the White House nor the Department of Justice has commented. You should treat reports of an imminent pardon without an official source as rumours.

FTX repayment: 105 percent based on 2022 dollar values

Alongside the criminal case, the wind-down of FTX continues. The bankruptcy plan has been in force since January 2025, and the FTX Recovery Trust handles the payouts. According to trade media, it had distributed around $10.3 billion to creditors by the end of June 2026. On March 31, 2026, the fourth round paid out around $2.2 billion, followed by around $900 million in the fifth round on July 31.

After the fifth round, customers of the international platform FTX.com, class 5A in the plan, stand at 105 percent of their allowed claim. Customers of the US platform are also at 105 percent, general unsecured creditors at 103 percent, and small claims, the so-called convenience claims, at 120 percent. As of early November, no date for a sixth round had been published.

The percentages refer to the dollar value as of November 11, 2022. Anyone who held one bitcoin on FTX at the time has a claim of around $17,000 and receives 105 percent of it, or just under $18,000. In early November, one bitcoin cost between $77,000 and $81,000. Measured in coins, such a customer therefore gets back less than a quarter of their former holdings. For Solana the gap is even wider: SOL cost less than $20 in November 2022 and just under $100 in early November 2026. Creditors challenged this valuation in court, but bankruptcy law prescribes the cut-off date.

FTX customers in Europe: FTX EU, Backpack and the claims portal

For customers in Germany and the rest of the EU there are two routes, depending on which FTX entity held the account. FTX EU was a subsidiary licensed in Cyprus that the provider Backpack Exchange acquired from the bankruptcy estate. Backpack has set up its own refund procedure with identity verification for euro balances at FTX EU, separate from the bankruptcy plan in the US. EU customers who registered with FTX before March 7, 2022, on the other hand, count as customers of FTX International and go through the general procedure.

For the general procedure, you have to log in to the claims.ftx.com portal, complete identity verification, submit tax forms and choose one of the three distribution agents, BitGo, Kraken or Payoneer. Only then does the trust pay out on the next distribution date. According to reports on the trust's quarterly report, $59 million was still set aside at the end of June for creditors who had not completed these steps.

How the German tax office treats a repayment from the FTX proceedings has not been conclusively settled. Among other things, it depends on when you bought the coins and whether you have already claimed a loss. Keep account statements, the claim confirmation and every payment from the trust on file before you submit your tax return.

The lesson from FTX: what MiCA requires for the custody of customer funds

The collapse of FTX came at a time when the EU was working on its Markets in Crypto-Assets Regulation, MiCA for short. The regulation requires providers to hold their customers' crypto assets and funds separately from their own and prohibits them from using them for their own account. That separation is exactly what was missing at FTX. Since the end of the transition period, exchanges serving customers in Germany need a MiCA licence. We summarise the obligations that come with a MiCA licence on a separate page.

A licence does not make an exchange invulnerable, but it does change the starting position. A supervisor such as Germany's BaFin or its sister authorities in other EU countries examines capital, custody and management, and segregated custody makes it easier to return assets to customers in an emergency. When you choose a platform, a look at the comparison of regulated crypto exchanges should therefore be the first step, before fees and coin selection.

The second lesson concerns self-custody. Coins on an exchange are, legally, a claim against the operator. Coins in your own wallet, whose private key only you know, belong to you. A hardware wallet is a small device that stores this key offline and signs transactions only after you confirm them on the device. For amounts you are not actively trading, this is the form of custody that rules out a case like FTX.

Sam Bankman-Fried: free in 2044 at the earliest, but the lesson applies today

Whether the Supreme Court takes the case will be decided in the coming months, and a pardon remains speculation. Neither changes much for investors. The case points to three concrete steps for how you hold your own assets:

1. Keep holdings off the exchange: What you hold for the long term belongs in your own wallet. The hardware wallet comparison shows devices, prices and the differences in how they secure the key.
2. Trade only with licensed providers: Before opening an account, check whether the exchange has a MiCA licence and where it is supervised. You will find an overview by fees and licensing in the crypto exchange comparison.
3. Document every transaction: In an emergency, a complete record determines your claim and its tax treatment. A tool from the crypto tax software comparison records purchases, sales and holdings automatically.

(As of November 4, 2026. This article is not investment advice. Prices and fee structures change; check the terms with the provider before you buy.)