DOJ says lack of U.S. legal framework no barrier for fraud charges against FTX founder

DOJ says lack of U.S. legal framework no barrier for fraud charges against FTX founder

The absence of a clear U.S. legal framework for crypto is no barrier for pressing fraud charges against FTX founder Sam Bankman-Fried, the Justice Department said in a filing published Wednesday.

While lawyers from both sides are still sparring over what evidence the as-yet-unselected jury will be able to hear. The prosecutors are now fighting claims that the regulatory status of crypto exchanges is relevant, Bankman-Fried said on Monday.

Prosecutors also dismissed Bankman-Fried's arguments that pooling and reallocating customer funds was common in the crypto industry at the time, saying that legal argument only worked if he believed the practice was lawful.

Bankman-Fried can point the jury towards his philanthropy and charitable work, the DOJ said, but he must raise his plans to do so with the court first to ensure he isn't merely trying to paint a rosier picture of his character.

Congress' inability to regulate a specific procedure for crypto has been a bothersome issue for the sector for a long time. Federal regulators have argued that Crypto should be treated like conventional securities trading, a legal claim opposed by major players such as Ripple, Binance and Coinbase, in the absence of tailored laws.

The government also revealed how it will handle allegations that Bankman-Fried orchestrated illegitimate and indirect donations to political candidates - something that was withdrawn from the charge sheet because it wasn't included in the original extradition deal with the Bahamas.

The DOJ said that he was raising the issue to establish that the defendant spent these funds in a manner inconsistent with his representations to customers and took steps to conceal his possession of these proceeds.