Celsius founder’s criminal trial to begin in September 2024
Former Celsius Network CEO Alex Mashinsky, who is currently facing seven criminal charges related to cryptocurrency fraud, is set to go on trial on September 17, 2024, in a New York court.
Mashinsky will remain free on $40 million bail throughout the legal proceedings, though certain restrictions on his travel and financial transactions remain in place. Additionally, Roni Cohen-Pavon, Celsius’ former chief revenue officer, pleaded guilty to four criminal charges in September and will be available to testify in Mashinsky’s trial if necessary.
During a hearing in the U.S. District Court for the Southern District of New York, Mashinsky’s legal team indicated that their defense strategy would likely involve challenging the classification of cryptocurrency as a security. They pointed out that the legal definition of a security can be subject to interpretation, suggesting that they may argue against this classification in the case.
The development comes as the Department of Justice (DOJ) moved to freeze the assets of the founder and former CEO of the collapsed crypto lender. The judge ordered that Mashinsky’s bank accounts be frozen across several financial institutions, including major names like Goldman Sachs, Merrill Lynch, First Republic Securities, SoFi Bank, and SoFi Securities. Furthermore, this freeze extends to a property situated in Texas, co-owned by Mashinsky and his spouse, Kristine.
Celsius Network, once a major player in the crypto lending industry, faced severe financial woes and eventually filed for bankruptcy in 2022. This bankruptcy filing brought to light large financial liabilities that exceeded the platform’s assets by $1.2 billion.
Back in July, the Securities and Exchange Commission (SEC) launched a lawsuit against Celsius and its former CEO. The lawsuit accuses them of engaging in fraudulent and unregistered sales of “crypto asset securities,” disseminating false information to investors about Celsius’s financial stability, and manipulating the price of CEL, the native token of the platform.
Shortly after his arrest, Mashinsky entered a plea of not guilty to securities fraud charges and was then released on bail secured by his residence in Manhattan. Furthermore, Mashinsky was instructed to surrender his travel documents to the authorities. His travel will be limited to the New York area, and he is prohibited from opening any new financial, business, or personal bank accounts, lines of credit, or cryptocurrency accounts without prior approval.
During a hearing at the Manhattan federal court, Alex Mashinsky pleaded not guilty to multiple charges, including securities, commodities, and wire fraud, as well as manipulating the price of CEL tokens. Celsius’ chief risk officer, Roni Cohen-Pavon, is also facing the same charges. If found guilty, both executives could face lengthy prison sentences, spanning several decades.