DOJ says FTX founder can't rely on U.S. regulations for its defense

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DOJ says FTX founder can't rely on U.S. regulations for its defense

The U.S. Department of Justice has argued that FTX founder Sam Bankman-Fried cannot rely on the nation's lack of clear regulatory frameworks for the emerging industry in his defense.

In a letter dated Oct. 4 to Judge Kaplan, the DOJ said there are restrictions on misappropriation of customer assets, which are the laws SBF violated. 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 further said 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 U.S. crypto regulatory landscape has faced widespread criticism from numerous stakeholders due to the lack of clear legal frameworks. Crypto firms, such as Ripple and Coinbase, have faced challenges, urging Congress to create laws tailored to the sector.

The SBF trial began Oct. 3 and is expected to last for the next six weeks. He faces seven 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.