Sam Bankman-Fried, founder of cryptocurrency exchange FTX and trading firm Alameda Research, lost his appeal at the Second Circuit Court of Appeals in June 2026, upholding his 25-year federal prison sentence for fraud and conspiracy. A Manhattan jury convicted him in November 2023 on seven counts after prosecutors established he misappropriated $8 billion in customer deposits to cover trading losses at Alameda Research. The FTX Recovery Trust has distributed roughly $10 billion to creditors across four payout rounds, with U.S. customer claims reaching 100 percent recovery based on November 2022 valuations, though creditors whose assets later appreciated argue the methodology undercompensates them.
Bankman-Fried Co-Founds Alameda Research in November 2017
Born March 5, 1992, Bankman-Fried grew up on Stanford's campus, where both parents were law professors. He studied mathematics and physics at MIT before joining Jane Street Capital, a quantitative trading firm. In November 2017, he cofounded Alameda Research with Tara Mac Aulay, starting with $55 million under management. Early profits came from Bitcoin arbitrage between Japanese and American exchanges, generating $10 million to $30 million. Mac Aulay departed within a year, citing "concerns over risk management and business ethics," according to InfluenceWatch. By 2021, Bankman-Fried held 90 percent ownership of Alameda.
FTX Reaches $32 Billion Valuation by February 2022
Bankman-Fried launched FTX in May 2019 as a derivatives exchange. Binance invested $70 million in FTX's early stage. By February 2022, FTX had raised $400 million in a Series C round led by SoftBank and Temasek at a $32 billion valuation. The exchange reported $1.02 billion in revenue for 2021. Alameda acted as FTX's primary market maker and held a "secret exemption" from FTX's auto-liquidation protocol, according to bankruptcy examiner John J. Ray III.
CoinDesk Report Triggers $8 Billion Collapse in November 2022
The unraveling began on November 2, 2022, when CoinDesk published a report revealing that Alameda's balance sheet was heavily concentrated in FTT, FTX's own exchange token. Binance CEO Changpeng Zhao announced his intention to sell his FTT holdings on November 6, triggering a run on the exchange. Within days, FTX could not honor withdrawal requests. An internal review found an $8 billion shortfall in customer funds. FTX and more than 130 affiliated entities filed for Chapter 11 bankruptcy on November 11, 2022. Bankman-Fried resigned and was replaced by John J. Ray III, who had overseen the Enron liquidation.
Manhattan Jury Convicts Bankman-Fried on Seven Counts in November 2023
Prosecutors accused Bankman-Fried of stealing $8 billion to fund trading losses, real estate, and political contributions. A Manhattan jury convicted him on all seven counts in November 2023. Three former deputies, including CEO Caroline Ellison and CTO Gary Wang, pleaded guilty and testified against him. Judge Lewis Kaplan sentenced Bankman-Fried to 25 years on March 28, 2024, plus $11.02 billion in forfeiture. Kaplan noted there was a risk "that this man will be in a position to do something very bad in the future, and it's not a trivial risk."
FTX Recovery Trust Distributes $10 Billion Across Four Rounds
The FTX Recovery Trust recovered approximately $18 billion through liquidations, including stakes in Anthropic and Robinhood. Four distribution rounds totaling roughly $10 billion have been completed, with the most recent $2.2 billion paid in March 2026. U.S. customer claims reached 100 percent recovery, while convenience class claims received a cumulative 120 percent. All claims are valued at November 2022 prices, when Bitcoin traded below $17,000. The FTX Recovery Trust has indicated that additional distribution rounds are forthcoming, pending the liquidation of remaining assets and court approvals.
Second Circuit Denies Appeal in June 2026
Bankman-Fried lost his appeal at the Second Circuit Court of Appeals in June 2026. The three-judge panel described the prosecution's evidence as "conservatively stated, robust." A pardon application to President Trump is pending, though Trump stated in January that he has no intention of granting one. Under the First Step Act, Bankman-Fried could serve as few as 12.5 years with full good-behavior credits.
FAQ
What happened to FTX in November 2022?
FTX collapsed in November 2022 after customer withdrawals revealed an $8 billion shortfall stemming from the diversion of deposits to its sister company, Alameda Research. CoinDesk published a report on November 2, 2022 revealing Alameda's balance sheet concentration in FTT tokens, triggering a withdrawal run that FTX could not honor. The exchange filed for Chapter 11 bankruptcy on November 11, 2022.
What was Sam Bankman-Fried's sentence on March 28, 2024?
Judge Lewis Kaplan sentenced Bankman-Fried to 25 years in federal prison on March 28, 2024, along with three years of supervised release and $11.02 billion forfeiture. The sentence followed a Manhattan jury conviction in November 2023 on seven fraud and conspiracy counts.
How much money have FTX creditors recovered?
The FTX Recovery Trust has distributed roughly $10 billion across four payout rounds, with the most recent $2.2 billion paid in March 2026. U.S. customer claims reached 100 percent recovery based on November 2022 valuations, while convenience class claims received a cumulative 120 percent. The Trust recovered approximately $18 billion through liquidations of assets including stakes in Anthropic and Robinhood.
