As a seasoned crypto investor who has weathered numerous market cycles and witnessed the rise and fall of multiple digital assets platforms, I find myself closely following the ongoing trial of Alex Mashinsky, the founder of Celsius Network. While I was not directly affected by the collapse of Celsius, I have lost money in other crypto ventures that were plagued by fraudulent activities or poor management decisions. Therefore, I understand the frustration and disappointment felt by those who invested in Celsius and are now waiting for justice to be served.
Lawyers for Alex Mashinsky contend that his actions were not motivated by an intention to deceive or cause harm, and they believe the information he shared in his weekly video updates with Celsius clients was given in good trust.
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What Celsius case is about?
2022 saw Celsius Network as one of the most significant victims of a harsh cryptocurrency winter, leading to an unexpected halt in withdrawal services for approximately 1.7 million users.
The company had suffered from a huge black hole in its balance sheet — and abruptly tipped into bankruptcy, blaming “extreme market conditions.”
According to prosecutors, while founder Alex Mashinsky repeatedly claimed his platform offered services superior to banks and promised returns that appeared almost unbelievable, they argue that the reality behind the curtains was quite distinct.
As an analyst, I’ve uncovered concerns regarding potential false and misleading communications directed toward investors about our native token, CEL. Additionally, I’ve found evidence suggesting widespread market manipulation associated with the trading of CEL.
And while Celsius had insisted that it was a safe investment opportunity, regulators warned “significant risks” had been taken with investors’ funds.
Today, over two years after the disastrous fall of the failed company, Mashinsky will stand trial in New York City. He currently faces a total of seven criminal accusations.
Among the offenses are wire fraud, securities fraud, and commodities fraud. If found guilty, the disgraced businessperson may potentially spend up to 115 years in prison.
When the arrest took place back in July 2023, U.S. Attorney Damian Williams declared:
“If you rip off ordinary investors to line your own pockets, we will hold you accountable.”
The Department of Justice demonstrates a history of effectively resolving complex cryptocurrency failures and amassing the necessary proof for successful prosecutions.
In November 2022, the cryptocurrency exchange FTX collapsed. Then, within just a few months, Sam Bankman-Fried was convicted on all seven charges brought against him and eventually sentenced to serve 25 years in prison.
His lawyers have initiated an appeal process, contending that the judge showed bias towards him during the court proceedings.
Previously high-ranking official at Celsius, Roni Cohen-Pavon, admitted guilt for four counts on September 13. Cohen-Pavon, a native of Israel, is currently out on a $500,000 bond and has the permission to travel to Israel. He has consented to collaborate with the prosecution.
Mashinsky’s strategy
Lawyers for Mashinsky contend that he acted “without any intention of deceiving or causing harm” when making statements to Celsius clients, and these communications were based on sincere beliefs.
Six ex-executives from the company, including the former CFO, are being asked to provide testimonies. In a recent court filing, Mukasey Young, their legal representation, stated…
Essentially, it seems that Mr. Mashinsky is being accused for things he wasn’t aware of, didn’t intend to commit any crimes about, and in some cases, even advised against. It would be fair to give Mr. Mashinsky the chance to interrogate those who are being blamed for his actions.
In simpler terms, the attorneys advised that since Mashinsky might be looking at significant penalties due to the possible sentencing, and considering it could mean spending the rest of his life in prison, it would be fair for the ex-businessman to collect evidence to support his case.
One significant hurdle for Mashinsky is finding a solution when five witnesses, who reside overseas, are unreachable by a U.S. court through subpoena.
“An inability to obtain the testimony of these witnesses would result in a failure of justice.”
Creditors repaid
Recently, efforts have been made to reimburse customers who were unable to access their savings when Celsius collapsed.
As an analyst, I’ve noticed a significant advantage for creditors in our current situation. They’ve been recovering approximately 85 cents for every dollar owed, which is substantially higher than what creditors of other bankrupt companies have received.
A significant portion of the money recouped from the crypto market’s recent surge has, unexpectedly, been directed towards the legal teams managing the Chapter 11 bankruptcy process.
For numerous affected individuals, collecting their payments has been both joyful and sad. While it brings an end to prolonged periods of doubt, it also means they’ve missed out on the surge in cryptocurrency values during that time.
After emerging from bankruptcy, Celsius is now known as Ionic Digital, a firm dedicated to the mining of Bitcoin. Its creditors serve as its new shareholders.
Earlier this month, news broke about the activation of a cutting-edge complex in Texas, which houses more than 15,000 mining machines. This marks the initial construction of a four-building project.
Data from Ionic indicates that the company extracted approximately 1,331 Bitcoins within a span of six months, specifically from February to July.
Even though this financial settlement has been reached, numerous individuals entangled in the Celsius predicament are expected to pay close attention to Alex Mashinsky’s trial – some even going as far as submitting victim impact declarations to detail their experiences related to the bankruptcy.
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2024-09-18 01:10