SBF Trial: Bankman-Fried cannot rely on US unclear crypto regulatory regime in trial, DOJ says SBF Trial: Bankman-Fried cannot rely on US unclear crypto regulatory regime in trial, DOJ says
The U.S. crypto regulatory landscape remains unclear as the authorities are yet to formulate laws catering to the industry.
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Updated: Oct. 4, 2023 at 11:24 am UTC
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The U.S. Department of Justice (DOJ) has argued that FTX founder Sam Bankman-Fried cannot rely on the country’s lack of clear regulatory frameworks for the emerging industry in his defense.
In an Oct. 4 letter to Judge Kaplan, the DOJ wrote that there are prohibitions on misappropriation of customer assets, which are the laws SBF violated. So, it would be wrong for the defense to mislead the jury that a cryptocurrency exchange can only be found guilty if the laws say that such platforms can never touch customer funds.
Besides that, the DOJ furthered that SBF could only use the argument that other crypto exchanges were “pooling and reallocating their customers’ funds” if he could establish that he knew about their practices and believed they were acting lawfully.
The DOJ concluded that:
“The Government alleges that the defendant not just misappropriated customer money, but made material misrepresentations to customers. The putative ‘absence of clearly applicable laws or regulations’ is irrelevant to whether the defendant made material misstatements or omissions. Accordingly, the existence or absence of regulation is not relevant to proof of the actus reus of the wire fraud charges.”
The U.S. crypto regulatory landscape has come under consistent criticism from several stakeholders over the lack of clear legal frameworks. Several crypto firms, including Ripple and Coinbase, have led crusades urging Congress to create laws tailored to the industry.
SBF trial began yesterday, Oct. 3, and is expected to last for the next six weeks. He faces seven primary charges, including wire fraud, conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the Federal Election Commission.
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FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Sam Bankman-Fried is the former CEO, and co-founder of defunct crypto exchange FTX and Alameda Research.
