New documents show that prosecutors in Sam Bankman-Fried’s fraud trial are resisting his attempt to use arguments about the U.S. regulatory framework to fight his charges.
In a new lawsuit, the government says the former FTX executive cannot claim his innocence because FTX “was not regulated in the United States and he followed the rules governing FTX US.”
“The government has previously taken steps to rule this out [an] argument as irrelevant, and more prejudicial and confusing than probative under Federal Rule of Evidence 403. Defendant opposed the motion.”
According to the defendant, the laws – or lack thereof – are relevant because they would determine whether he technically embezzled money or not.
Bankman-Fried suggests that there are no specific laws prohibiting crypto exchanges from using funds deposited by customers for their own purposes.
But prosecutors say Bankman-Fried’s argument is ultimately irrelevant and could confuse the jury.
“The defendant primarily argues that the existence of laws or regulations prohibiting the use of funds is relevant to the question of whether ‘the funds were actually misappropriated.’ To prove embezzlement, the government must establish that the suspect fraudulently appropriated for his own use the money that was ‘entrusted to him’. [his] care by someone else.’
While the existence of a law may be relevant to establishing a legal duty of care, the absence of regulation is irrelevant to whether money has actually been entrusted to the suspect’s care by his victims. [Any] evidence or argument about the lack of regulation is likely only to confuse the jury into believing that there must be a regulation imposing a duty for embezzlement.
Furthermore, the government alleges that the defendant not only embezzled customer funds, but also materially misrepresented himself to customers. The alleged ‘lack of clearly applicable law or regulation’ is not relevant to the question of whether the suspect has made material misstatements or omissions.”
The trial against Bankman-Fried is entering its second day. He faces decades behind bars.
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