The former CEO of crypto loan platform Celsius, Alex Mashinsky, will face several criminal charges after a federal judge dismissed his attempt to dismiss two fraud counts. In a recent decision, U.S. District Judge John Koeltl deemed Mashinsky’s arguments for dismissing the accusations of commodities fraud and CEL token price manipulation “either moot or without merit.” This verdict upholds seven counts against Mashinsky, paving the way for his trial in January 2025.
Mashinsky’s legal team identified inconsistencies in the case, pointing out that the Celsius Earn Program, which the prosecutors claimed was a security, also encompassed Bitcoin deposits, categorised as commodities. Moreover, they asserted that Mashinsky did not receive sufficient notification about the potential criminal violation associated with the alleged price manipulation of the Celsius (CEL) token. Judge Koeltl dismissed these arguments, enabling the prosecution to proceed with the fraud accusations stemming from suspected market manipulation and misleading actions at Celsius.
Mashinsky’s defense also asked for the exclusion of information about Celsius’s 2022 bankruptcy from the trial, citing potential bias. However, the judge deferred ruling on this motion, indicating that it will be addressed closer to the trial, either through pre-trial motions or during the trial itself. Furthermore, Mashinsky’s lawyers requested permission to interrogate potential jurors about their connection with FTX, claiming that the now-defunct exchange’s reputation could sway juror impartiality due to its “toxic” effect in the crypto field.
The claims against Mashinsky arise from Celsius’s financial collapse, when the platform experienced liquidity concerns and halted consumer withdrawals. Prosecutors allege that Mashinsky misled investors about Celsius’s stability and profitability, resulting in significant losses for clients. According to the claims, he used tactics to artificially boost CEL token prices, benefiting from the increase in value before the company’s demise.
After his arrest in July 2023, Mashinsky entered a not guilty plea and is currently free on a $40 million bond. If convicted of all counts, he might face a lengthy prison sentence. Meanwhile, Celsius’s former Chief Revenue Officer, Roni Cohen-Pavon, recently pleaded guilty in the same case and is likely to testify. The prosecution plans to use Cohen-Pavon’s evidence in their case against Mashinsky, with his prospective sentencing date set for December.
In addition to criminal accusations, Mashinsky is facing civil litigation from regulatory authorities such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). This protracted legal battle reflects larger scrutiny of the Bitcoin industry, as regulators are actively pursuing charges against prominent personalities and companies.
