Celsius founder Alex Mashinsky loses bid to dismiss charges

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As a seasoned analyst with over two decades of experience in the financial industry, I find myself following the legal proceedings of Alex Mashinsky, the former CEO of Celsius Network, with a mixture of intrigue and caution. The recent ruling by Judge John G. Koeltl denying Mashinsky’s motion to dismiss two fraud charges is not unexpected, given the mounting evidence against him and the current regulatory climate in the crypto space.

In simpler terms, a court decision denied Alex Mashinsky’s request to drop two accusations of fraud that were brought against him in connection with his previous role as CEO at the now-defunct Celsius Network.

A federal judge in New York ruled against Mashinsky’s motion, which alleged he manipulated the price of Celsius’s cryptocurrency, CEL token, by artificially inflating it, per Bloomberg Law.

Mashinsky contended that some charges were unnecessary and had legal inconsistencies, stating that it was impossible for his actions to breach both the Commodity Exchange Act and the Securities Exchange Act at the same time.

Nonetheless, Judge John G. Koeltl dismissed this argument, explaining that each accusation is capable of being independently substantiated by law.

One dismissed argument focused on whether Celsius’s deposit program qualified as a commodity contract, offering “rewards” to investors who deposited Bitcoin (BTC). The judge ruled that this question could be better addressed later in court.

Celsius’s 2022 collapse 

Mashinsky faces charges of wire fraud and market manipulation linked to Celsius’s 2022 collapse. 

Previously, Celsius was a well-known figure in the crypto lending sector. Unfortunately, it encountered financial difficulties in 2022, leading to the freezing of customer withdrawals and subsequently filing for bankruptcy due to a substantial shortfall on its financial statements.

According to prosecutors, Mashinsky is accused of deceiving investors about the safety of the company’s native token, CEL, by giving them false information.

Mashinsky is set to stand trial in New York for seven alleged crimes, such as fraud. If found guilty, he may face a potential prison term of up to 115 years. The trial commenced in the month of September.

His case follows the high-profile conviction of FTX founder Sam Bankman-Fried, who was sentenced to 25 years in prison for similar charges.

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2024-11-11 21:52