Federal Judge Rules ChatGPT Records Can Be Used as Evidence in Crypto Fraud Case

Federal Judge Allows Search of ChatGPT Records in Crypto Fraud Case

With more than a decade of experience, Nelson covers Apple and Google and writes about iPhone and Android features, privacy and security settings, and more. A federal judge has ruled that prosecutors can compel OpenAI to turn over ChatGPT account records belonging to Richard Kim, the former chief executive of cryptocurrency startup Zero Edge, as part of a fraud case alleging he diverted investor money into crypto trades and online gambling. Prosecutors allege that Kim diverted about $3.8 million from a $4.3 million fundraising round for Zero Edge and that, following his arrest, he used ChatGPT to research his case, including his trial strategy. Court filings indicate that Kim may also have used the AI to generate numerous prompts related to misappropriating investor funds, cryptocurrency trading and gambling. Kim has pleaded not guilty to securities and wire fraud charges. US District Judge Lorna Schofield on Monday rejected the defense's attempt to shield the chatbot data, establishing that AI chat logs can be treated as third-party digital evidence subject to a search warrant. The warrant seeks Kim's OpenAI records from October 2023 through May 2026, including prompts, responses and account information. The case is a reminder that conversations with AI chatbots can become part of a legal record. As more people use tools like ChatGPT for research and personal advice, courts are beginning to treat AI chats like other digital records, such as your emails, texts and search history. That also means using a chatbot for legal research doesn't automatically make the conversation private or protected. Can a chatbot be protected by attorney-client privilege? Kim's lawyers tried to block a search warrant, arguing that the chatbot data contains privileged information and research related to the case. According to the defense, those digital records should be protected, as they would expose Kim's internal thoughts, defense tactics and trial strategy. Prosecutors countered that, for the attorney-client privilege to apply, a conversation must be confidential between a human and a licensed legal professional for the purpose of obtaining legal advice. An AI chatbot cannot be a lawyer. Schofield's ruling does not determine whether Kim's ChatGPT records are protected by attorney-client privilege, but it does allow the warrant to proceed, meaning the defense cannot stop OpenAI from complying. Kim may still challenge specific records afterward. The dispute adds to a growing legal question about whether conversations with tools like ChatGPT, Gemini or Claude can remain private when they are used for legal research. This ruling aligns with a landmark decision from earlier this year in United States v. Heppner, in which another Manhattan judge found that a defendant's exchanges with Anthropic's Claude chatbot were not protected by attorney-client privilege or work-product protections. In that case, US District Judge Jed Rakoff said that AI platforms are third-party data collectors, not legal counsel. He noted that the defendant used Claude without his attorneys' direction and that the platform's privacy terms weakened any claim that the chats were confidential. Rakoff said AI use directed by an attorney could be treated differently. Future cases may draw sharper lines around when AI-assisted legal work can be protected, especially if a chatbot is used at an attorney's direction. It's not exactly a digital version of Miranda rights, but the warning here is similar: Anything you type can (and will) be used against you in a court of law. (Disclosure: Ziff Davis, CNET's parent company, filed a lawsuit against OpenAI in 2025, alleging it infringed Ziff Davis copyrights in training and operating its AI systems.)

Judge allows US search warrant targeting executive's AI chatbot records

June 23 (Reuters) - A federal judge has denied a bid by a business executive charged in a securities fraud prosecution to block a search warrant seeking data from ChatGPT maker OpenAI, rejecting his arguments that the request would sweep in protected communications with his defense lawyers. U.S. District Judge Lorna Schofield in Manhattan on Monday lifted, opens new tab a temporary block on the search warrant in her ruling against Richard Kim, who was charged in August with defrauding investors in his crypto venture Zero Edge. The warrant seeks records of his communications with a chatbot operated by OpenAI. Prosecutors say Kim's accounts at the AI company and at a rival platform likely contain evidence of his alleged scheme to defraud investors of Zero Edge over how their funds would be used. While the judge declined to quash the search warrant, Schofield's ruling does ⁠not bar Kim from later arguing that prosecutors should be blocked from using any evidence they obtained from OpenAI. Kim's lawyers did not immediately respond to a request for comment. He has pleaded not guilty to securities fraud and wire fraud charges. OpenAI, which is not a party to the litigation, also did not immediately respond to a request for comment. The U.S. attorney's office in Manhattan declined to comment. The judge's order is part of a growing number of disputes over whether and when conversations with artificial intelligence systems can be shielded from prosecutors. Kim's dispute parallels a February decision by U.S. District Judge Jed Rakoff in Manhattan, who ruled in an unrelated criminal case that prosecutors could obtain a defendant's communications with Anthropic's chatbot Claude and that such exchanges were ⁠not protected by attorney-client privilege. Kim's lawyers had argued in a court filing, opens new tab that the warrant was overbroad and risked exposing attorney-client communications and other protected information after his arrest last year. They said he used AI tools to conduct "case-related research" that would reveal defense strategy if disclosed. Prosecutors countered, opens new tab that any challenge to the warrant must come after the search. The government also told Schofield that Kim's communications with AI platforms are not ⁠privileged because chatbots are not lawyers, users cannot reasonably expect confidentiality with chatbots and such tools do not provide legal advice. Prosecutors told the court that they are prepared "to respect individual assertions of privilege properly justified by defense counsel after their review of the data produced by the ⁠providers." The case is United States v. Richard Kim, U.S. District Court, Southern District of New York, No. 1:25-cr-00359-LGS. For United States: Michael DiBattista and Ryan Nees of the U.S. Attorney's Office for the Southern District of New York For Kim: Kristoff Williams and Tamara ⁠Giwa of Federal Defenders of New York Judge rules both sides in lawsuit misused AI, disqualifies lawyers Group fights Shell Oil bid for AI prompts used in climate lawsuit OpenAI says ChatGPT is not a lawyer, asks court to toss insurer's lawsuit AI errors in US murder case lead to discipline for Georgia prosecutor Reporting by Mike Scarcella; editing by Nate Raymond Our Standards: The Thomson Reuters Trust Principles., opens new tab

Judge blocks subpoena for ChatGPT records in lender's lawsuit

WASHINGTON, June 15 (Reuters) - A New York state judge has rejected a subpoena that sought an OpenAI user's ChatGPT records as evidence in a private lawsuit, finding the chat logs were protected legal research by a defendant in the case. Justice Rhonda Fischer of Nassau County Supreme Court quashed the subpoena in a ruling, opens new tab made public last week -- one of the first decisions to tackle when AI companies must hand over users' records in civil cases. The lawsuit, filed in 2024 by private lender Alpha Tech Lending and its founder and other plaintiffs, accused former company president John Recchio III and others of breach of contract, unfair competition and related claims tied to a competing venture. Recchio denies the allegations. A lawyer ⁠for Alpha Tech Lending, Rick Ostrove of law firm Leeds Brown Law, said they disagreed with Fischer's ruling and plan to appeal. Recchio in a statement applauded Fischer's decision. "Civil discovery should not become a back door into private AI records, business information, or account materials absent legitimate legal grounds and court scrutiny," he said. OpenAI did not immediately respond to a request for comment. The company is not a party in the litigation. Alpha Tech Lending subpoenaed OpenAI for a range of data from Recchio's use of ChatGPT, including prompts, uploaded material and outputs used to generate filings or communications in the case. It argued, opens new tab the material was relevant to exploring the "basis, accuracy, and authenticity" of Recchio's ⁠claims and defenses. Recchio, who is representing himself in the case, asked the court, opens new tab to bar the subpoena, calling it a "fishing expedition" that sought "every imaginable piece of private information." He argued it would expose "private litigation workspace" materials, including legal research, drafts, strategy and other information prepared in anticipation of litigation. Fischer agreed in a decision dated June 4, concluding that "work product" protections for ⁠litigation-related materials applied to Recchio's AI chats. The judge cited a ruling, opens new tab in Colorado in which a federal court said a self-represented litigant's use of AI can resemble "confidential, strategy-laden iterative work product." Although AI tools collect user data, the judge in Colorado said, ⁠it "does not eliminate all expectations of privacy or automatically waive protections." A judge in federal court in New York issued a competing order in February, but Fischer said that involved a criminal case, not a civil one. Judge rules ⁠both sides in lawsuit misused AI, disqualifies lawyers Group fights Shell Oil bid for AI prompts used in climate lawsuit Fallout grows for former law partner sanctioned over AI 'hallucination' OpenAI says ChatGPT is not a lawyer, asks court to toss insurer's lawsuit US judges weigh risks as AI seeps into judicial work Reporting by Mike Scarcella Our Standards: The Thomson Reuters Trust Principles., opens new tab