Alex Mashinsky
Judge denies ex-Celsius CEO’s bid to dismiss fraud, manipulation charges
Lawyers representing Alex Mashinsky, the former CEO of the crypto platform Celsius facing a criminal indictment in the United States, have lost a motion to drop two charges related to commodities fraud and manipulating the price of the Celsius (CEL) token.
In a Nov. 8 filing in the US District Court for the Southern District of New York, Judge John Koeltl ruled that Mashinsky’s legal team’s arguments to have the charges dismissed were “either moot or without merit.” The judge denied the motion to dismiss the two charges, leaving seven counts on the indictment for the former Celsius CEO’s trial, scheduled to begin in January 2025.
Source: SDNY
The former Celsius CEO’s lawyers claimed that the securities and commodities fraud charges were inconsistent, as prosecutors alleged the platform’s Earn Program was treated as a security while the Bitcoin (BTC) deposited by investors were commodities. Mashinsky also claimed that he lacked “fair warning” that allegedly manipulating the price of CEL (CEL) was a criminal charge.
The motion to dismiss the two charges filed in January included a request for Judge Koeltl not to allow information on Celsius’ bankruptcy to be included in the criminal case. The judge declined to decide on the motion on Nov. 8, suggesting he would respond to motions in limine or at trial.
Questions about FTX for jurors
Following the Nov. 8 order, Mashinsky’s lawyers also requested they be allowed to ask prospective jurors questions about their knowledge of the defunct cryptocurrency exchange FTX. According to the legal team, there will “undoubtedly” be testimony about FTX at trial, and the exchange was “toxic in the cryptocurrency world.”
Related: Celsius token surges 300% a month after $2.5B payment to creditors
Authorities arrested and charged Mashinsky with seven felony counts in July 2023. He pleaded not guilty and has been free to travel with restrictions on a $40 million bond.
Former Celsius chief revenue officer Roni Cohen-Pavon, indicted alongside Mashinsky, also faces charges for “illicitly” manipulating the CEL price. Cohen-Pavon initially pleaded not guilty but later changed his plea to guilty. He is scheduled to be sentenced on Dec. 11.
Magazine: ‘Less flashy’ Mashinsky set for less jail time than SBF: Inner City Press, X Hall of Flame
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Celcius, a global crypto and Bitcoin mining company has faced a fraud case since last year. Now, the founder pleaded guilty and agreed to be jailed for 30 years.
Alex Mashinsky, the founder and ex-CEO of Celcius Network, is set to plead guilty to fraud charges, Reuters reported on Dec. 03. The federal prosecutor accused Mashinsky of pursuing customers to invest in them and unnaturally inflating the value of the company on the crypto token.
In order to deal with prosecutors, Mashinsky agreed to be jailed in prison for 30 years or less. Therefore, his sentence is set to be announced by the court later next year on Apr. 08.
“I know what I did was wrong, and I want to try to do whatever I can to make it right,” he said.
Previously, he was counted for seven charges, including fraud, conspiracy, and market manipulation since last year. In court, he stated that he pleaded guilty to two out of those seven charges, which were commodity fraud and manipulating the Celcius token (CEL) price back in 2021.
Celcius price movement
Since the token was released, the CEL price has seen a meteoric increase of 14,700% from $0.05 to $7.4 in 2021. The surged price was only recorded in that year; after being accused, CEL saw an outflow and made the price go back to under $1 until Mashinsky’s arrest in July. 13; the token price was only $0.1.
Another development of the cases, Ben Armstrong, known as BitBoy Crypto, believes that Canadian businessman Kevin O’Leary was a key player in Celcius’s bankruptcy, as well as the FTX.
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Alex Mashinsky, the founder and former CEO of Celsius Network, has agreed to plead guilty to two fraud charges following an indictment filed in July 2023. His defense attorney announced this during a court hearing in a Manhattan federal court. The charges relate to allegations of fraud, conspiracy, and market manipulation concerning Celsius Network’s operations and its proprietary token, Cel.
This decision follows a legal battle that started earlier in 2023 when Mashinsky was initially charged with seven counts related to the collapse of Celsius.
Celsius Founder Alex Mashinsky Faces Guilty Plea for Fraud and Market Manipulation
In a recent development, Celsius Network founder Alex Mashinsky intends to plead guilty to two counts of fraud after being indicted in 2023. These charges stem from accusations that Mashinsky misled Celsius customers, prompting them to invest in the company’s crypto services under pretenses. Prosecutors claim that Mashinsky artificially inflated the value of the company’s proprietary token, Cel, to mislead investors and customers.
Moreover, Celsius founder is also accused of personally profiting from his actions. Federal prosecutors allege that he reaped approximately $42 million in proceeds from the sale of Cel tokens, further exacerbating the damage caused to investors.
Earlier this year, Celsius former chief revenue officer, Roni Cohen-Pavon, pleaded guilty to similar charges and agreed to cooperate with prosecutors’ ongoing investigation.
More so, in September 2024, Mashinsky sought the testimony of six former employees to support his defense in his ongoing fraud trial. Mashinsky blamed his team for misleading investors and misrepresenting the company’s financial condition.
Celsius Network’s Bankruptcy and the Fall
The criminal charges against Celsius founder come after the collapse of Celsius Network in 2022. The company filed for Chapter 11 bankruptcy protection in July 2022, following a rush of withdrawals by customers fearing insolvency. As a result, many customers were unable to access their funds. The bankruptcy was one of the first major events in a series of failures within the crypto lending sector during the 2022 market crash.
Similarly, this period also saw the collapse of other entities like FTX and Three Arrows Capital. However, in recent reports, after almost two years, the FTX reorganization plan is set to resume in January 2025. The plan will allow creditors to begin receiving payments, though users must create accounts with designated agents to be eligible.
The Celsius Network bankruptcy revealed financial mismanagement and fraud within the company, with customers accusing Mashinsky of misleading them. This financial instability ultimately led to the downfall and the legal charges against its former CEO.
Mashinsky’s legal team is continuing to navigate the fraud charges in preparation for his upcoming court appearances. Although he initially pleaded not guilty to the charges, Mashinsky has now agreed to plead guilty.
However, despite the Celsius founder guilty plea, at press time, CEL price remained relatively stable. The token, which has faced volatility since the collapse, has rallied by 17% over the past 24 hours. This recent uptick comes after a period of sharp declines, with CEL price dropping over 96% from its all-time high.
Ronny Mugendi
Ronny Mugendi is a seasoned crypto journalist with four years of professional experience, having contributed significantly to various media outlets on cryptocurrency trends and technologies. With over 4000 published articles across various media outlets, he aims to inform, educate and introduce more people to the Blockchain and DeFi world. Outside of his journalism career, Ronny enjoys the thrill of bike riding, exploring new trails and landscapes.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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