FTX Scandal: DOJ Says Crypto Fraud is Still a Crime, Even Without Explicit Regulations – Coinpedia Fintech News

• FTX scandals finds $8 billion in customer funds reportedly unaccounted for, with many facing severe financial losses.

• His defense – FTX is not based in the US, and SBF diligently adhered to all regulatory requirements concerning FTX US.

• SBF’s assertion about the lack of regulations governing customer funds usage is erroneous, and wire fraud allegations exist regardless.

The FTX scandal has sent shockwaves through the cryptocurrency world, with a staggering $8 billion in customer funds reportedly unaccounted for. Many individuals face severe financial losses, including life savings, college funds, and future investments.

Sam Bankman-Fried (SBF), the former CEO of FTX, finds himself at the center of this storm.

FTX’s International Status in Question

Despite the gravity of the allegations, SBF’s legal counsel has mounted a robust defense. They argue that FTX, the company in question, is not based in the United States. According to them, since SBF diligently adhered to all regulatory requirements concerning FTX US, charges related to the company’s international arm should not be applicable.

DOJ Counters

However, the United States Department of Justice (DOJ) narrates a different story. On October 4, they filed a motion contesting SBF’s defense. Their argument is clear: the absence of specific crypto regulations in the U.S. does not rule out that SBF is innocent. They contend that even without explicit legislation, existing rules are in place to safeguard customers’ funds.

The DOJ highlights that SBF’s assertion about the lack of regulations governing customer funds usage is erroneous, as there are established rules against such misconduct.

DOJ’s “Actus Reus” Theory

The DOJ delves into legal jargon, especially the “actus reus” which refers to a guilty act. They assert that whether or not specific regulations are in place, it cannot be disputed that wire fraud allegations exist. The absence of precise regulatory statutes doesn’t alter the fact that customers’ funds were mishandled.

Also Read: Potential Outcomes in the High-Profile Trial of FTX Founder Sam Bankman-Fried – Experts Debate

What Next for SBF?

The week will see many layers of SBF’s legal case that have led to his detention for breaching bail conditions and attempting to influence potential witnesses. Despite multiple appeals for pre-trial release, he remains in custody. His legal team contends that a lack of internet access has hindered his ability to prepare a robust defense, and they also note the absence of vegan meal options in detention. 

However, SBF’s jury trial commenced on October 3, with early reports suggesting it could extend for up to six weeks. The outcome of this trial could have far-reaching implications for the cryptocurrency industry and its legal framework. 

Also Read: SBF Legal Team Moves to Halt Ukrainian Witness Testimony, Cites Emotional Bias

Ego Could Be His Downfall

Attorney John Deaton, keenly interested in the case, said that Bankman-Fried’s ego might lead him to take a high-risk, all-or-nothing approach at trial, even though a guilty plea could result in a 10–20-year sentence. SBF may try to present his actions as well-intentioned mistakes, but legal experts caution that this strategy carries significant risks and could potentially fail.

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