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DoJ Opposes Sam Bankman-Fried’s Request to Limit Criminal Charges to US Business

2 mins
Updated by Geraint Price
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In Brief

  • The US DoJ finds it hard to distinguish between FTX and FTX.US, complicating the allocation of charges against Sam Bankman-Fried.
  • The DoJ claims FTX did not separate marketing for its international and US exchanges, potentially misleading customers.
  • The borderless nature of crypto firms like FTX poses regulatory challenges, as seen in recent lawsuits by the SEC.
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The US Department of Justice (DoJ) said the difference between FTX and FTX.US’ businesses was unclear, making it difficult to identify which businesses Sam Bankman-Fried’s charges should be associated with. Last year’s Superbowl advertising blitz blurred the lines between FTX Trading’s international and US business.

According to the DoJ, former FTX CEO Sam Bankman-Fried wants to limit charges about misleading advertising to the US arm. The DoJ argues that FTX made no internal distinction between advertising for the international exchange and the US exchange.

FTX Business Marketing Muddied Culpability

Employees said the exchange did not separate marketing expenses because clients of both businesses may reside in multiple regions. As a result, neither exchange could be certain to benefit from marketing efforts.

According to the DoJ:

“Celebrities are featured in advertisements describing ‘FTX’ as ‘ a safe and easy way to get into crypto’ and [show] customers using a device displaying the FTX logo, not the FTX.US logo.”

The DoJ expects FTX customers to testify that, regardless of the company’s intent, the advertising influenced their activity on FTX. They may have been misled into investing in something the exchange did not say was risky.

“These false statements were more than capable of leading a reasonable person to change his conduct and should thus be admitted at trial.”

Need a refresher on the collapse of Sam Bankman-Fried’s FTX empire? Read more here.

The DoJ’s statements come as Bankman-Fried awaits trial in a New York prison after alleged witness intimidation. Lawyers for the former FTX CEO had previously argued the prison didn’t afford the necessary resources to prepare a defense.

FTT/USD price tanked after Sam Bankman-Fried filed for FTX bankruptcy
FTT/USD price tanked after Sam Bankman-Fried filed for FTX bankruptcy | Source: BeInCrypto

Crypto’s Borderless Nature Challenges Regulators

The earlier filing by Bankman-Fried’s lawyers reveals US regulators’ challenge when charging crypto firms. Because most exchanges operate digitally, they have an international customer base that complicates litigation.

Read here about the case that could define the regulatory status of cryptocurrencies in the US.

The US Securities and Exchange Commission (SEC) recently sued former Terraform Labs CEO Do Kwon, arguing he misled Americans into investing in TerraUSD and LUNA. His lawyers argued the charges didn’t stick because the Kwon and Terraform Labs were based in Singapore and had a global client base.

“Kwon is the CEO of Terraform, an open-source software development company with limited contact with the U.S. Most of the company’s business is essentially global, and it’s not specifically aimed at the United States.”

In its recent lawsuit, the SEC accused Binance of serving US customers through its international site rather than its US arm. The agency said Binance listed several unregistered securities, but it is unclear whether these charges will hold water in court since there are no specific rules for registering crypto assets.

The charges also prompts questions on which country’s regulatory authority can rule on a token’s security status.

Got something to say about SBF’s request to limit charges according to FTX business units or anything else? Write to us or join the discussion on our Telegram channel. You can also catch us on TikTokFacebook, or X (Twitter).

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...