Judge Rejects Former Celsius CEO Alex Mashinsky’s Bid to Dismiss Fraud Charges

A federal decide has denied former Celsius Community CEO Alex Mashinsky’s request to have two fraud costs dismissed from his indictment.

The indictment accuses Mashinsky of manipulating the worth of the CEL token, Celsius’s native cryptocurrency, by synthetic inflation techniques.

Celsius’ CEO will nonetheless face trial on seven counts of fraud

U.S. District Decide John G. Koeltl dominated on Nov. 8 that Mashinsky’s authorized arguments had been “debatable or with out advantage.”

Mashinsky’s protection had argued that his actions couldn’t concurrently violate each the Commodity Alternate Act and the Securities Alternate Act. Nonetheless, the decide confirmed that the costs might proceed individually underneath every regulation.

One protection argument targeted on whether or not Celsius’s deposit program, which supplied rewards for Bitcoin deposits, constituted a commodity contract. Decide Koeltl dominated that this challenge might be addressed later in the course of the trial.

Mashinsky’s attorneys, Mukasey Younger LLP, sought to dismiss the Commodity Alternate Act cost, arguing that it overlapped with the Securities Alternate Act violation.

Decide Koeltl rejected this, stating {that a} conviction underneath one statute wouldn’t mechanically extinguish costs underneath the opposite statute.

Mashinsky’s conviction might be worse than Sam Bankman-Fried’s

Mashinsky is going through a number of costs, together with wire fraud and market manipulation, associated to Celsius’s 2022 collapse. As soon as a number one cryptocurrency lender, Celsius filed for chapter after freezing buyer withdrawals attributable to a major monetary shortfall.

Prosecutors allege that Mashinsky misled buyers in regards to the safety of the CEL token and the soundness of the platform. If convicted on all costs, Mashinsky faces a most sentence of 115 years.

His trial, which incorporates seven legal instances, started in September. The case follows the conviction of FTX founder Sam Bankman-Fried, who was given a 25-year jail sentence for comparable offences.

The previous CEO of Celsius was arrested in July 2023, when the SEC filed its first lawsuit in opposition to the inventory trade. Regardless of the allegations, Mashinsky pleaded not responsible to all fraud costs. After the arrest, the New York courtroom froze all his belongings, together with his residence in Texas.

Celsius was considered one of a number of crypto platforms that filed for chapter in 2022 following the collapse of Terra Luna and UST. The liquidity disaster and speedy withdrawals uncovered the fraudulent practices of many platforms on the time, together with Celsius and FTX. Earlier in September, Caroline Elison, the previous CEO of Alameda Analysis, was additionally sentenced to 2 years in jail for her position within the collapse of the FTX.