No Pardon for SBF: Senate's Unanimous Verdict Shakes Crypto World

The United States Senate on Wednesday passed a resolution, S. Res. 772, by unanimous consent, explicitly stating that FTX founder Sam Bankman-Fried should “under no circumstances” receive executive clemency. This decisive action serves as a direct rebuke of Bankman-Fried’s recent request for President Donald Trump to commute or pardon his lengthy sentence. The resolution expresses the Senate’s collective view that Bankman-Fried should not be granted either a pardon or a commutation, and it underscores the chamber’s unwavering commitment to “the rule of law and integrity of the United States financial system.” While the resolution is nonbinding, it represents a significant congressional statement and does not restrict the president’s constitutional authority to grant clemency.

The measure was sponsored by Senator Cynthia Lummis, a Wyoming Republican, and Senator Ruben Gallego, an Arizona Democrat. Both senators hold key positions as the top Republican and top Democrat, respectively, on the Senate Banking Committee’s digital assets subcommittee. They introduced the resolution on June 17, just days after Bankman-Fried formally submitted his pardon application to the Justice Department. Senator Lummis, known as a committed advocate for the crypto industry in Congress, surprisingly led the charge to ensure one of the industry’s most controversial figures remains imprisoned. She remarked during the resolution’s introduction, “He had his day in court,” while Senator Gallego’s statement concluded emphatically with, “Keep him locked up.”

The text of the Senate resolution further asserts that Bankman-Fried’s 25-year prison sentence “reflects the extraordinary scale and deliberateness of his crimes, his lack of remorse, and the catastrophic harm inflicted upon millions of victims.” Bankman-Fried, who is 34 years old, filed his petition on June 8, seeking a “pardon after completion of sentence.” This specific form of clemency would not erase his conviction but would restore his civil rights, such as voting and jury service, and remove barriers to licensing, employment, and housing once he is released from prison, which is not anticipated until around 2044.

Despite Bankman-Fried’s application, former President Trump had stated in a January interview that he had no intention of pardoning him. However, during his second term, Trump has previously granted clemency to other individuals linked to crypto and online markets, including Binance founder Changpeng Zhao and Silk Road creator Ross Ulbricht, alongside other white-collar offenders.

Bankman-Fried’s conviction stemmed from a jury verdict in November 2023, where he was found guilty on seven counts related to the collapse of FTX. Prosecutors described his actions as one of the largest financial frauds in U.S. history, leading to American customers losing more than $8 billion. He was subsequently sentenced to 25 years in prison in 2024.

The intricate scheme involved Bankman-Fried simultaneously operating two companies: FTX, a cryptocurrency exchange responsible for holding customer money like a broker, and Alameda Research, a trading firm he owned. He illicitly transferred billions of dollars in FTX customer deposits to Alameda, which then utilized these funds for various purposes including trades, venture investments, political donations, and purchasing Bahamian real estate. Crucially, FTX’s software was designed to exempt Alameda from the standard rules that would have otherwise required it to cover its losses like any other trader.

The fraudulent arrangement unraveled when Alameda’s balance sheet was discovered and reported, revealing that a significant portion of what the firm considered assets was FTT, a token created and issued at will by FTX itself. Essentially, the collateral backing Alameda was an asset invented by its sister company. Following this revelation, the rival exchange Binance announced its intention to sell its FTT holdings, causing the token’s price to plummet. Consequently, customers initiated large-scale withdrawals, but FTX was unable to return the money as it had already been misappropriated. This led to FTX filing for bankruptcy on November 11, 2022. CoinDesk was notably the first to report on FTX’s dubious balance sheets, bringing the scandal to light.