DOJ says lack of U.S. legal framework no bar for fraud charges

DOJ says lack of U.S. legal framework no bar for fraud charges

The absence of a clear U.S. legal framework for crypto is no bar for pressing fraud charges against FTX founder Sam Bankman-Fried, the department of justice said in a filing published Monday.

The two sides of the case 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, said Bankman-Fried 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 charity work, the judge 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.

The issue of Congress's failing to regulate a specific treatment for crypto has been a bothersome issue for the industry for some time. Federal regulators have argued that Crypto should be treated like conventional securities trading, a legal claim against major players such as Ripple, Binance and Coinbase, in the absence of tailored laws.

The government also clarificationd how it plans to 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that Bankman-Fried orchestrated illegitimate and indirect donations to political candidates - something that was withdrawn from the charge sheet because it wasn't included in the original extradition deal with the Bahamas.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 it was raising the topic to establish that the defendant had spent these funds in a manner inconsistent with his representations to customers and took steps to hide his possession of these proceeds.