Alex Mashinsky, former CEO of crypto lender Celsius, will face trial on commodities fraud charges after a federal judge denied his motion to dismiss two counts related to alleged manipulation of the Celsius (CEL) token.
Mashinsky was arrested last year on charges of defrauding customers and misleading them about Celsius’ profitability.
Judge John Koeltl of the U.S. District Court for the Southern District of New York stated that Mashinsky’s arguments were “either moot or without merit.” The denial leaves seven counts on the indictment, with Mashinsky’s trial set to begin in January 2025.
Mashinsky’s legal team argued that the charges were inconsistent, claiming it was unclear whether Celsius’ Earn Program, allegedly treated as a security by prosecutors, was linked to commodities such as Bitcoin deposited by investors. They also argued that Mashinsky did not receive adequate warning that his alleged CEL price manipulation could result in criminal charges.
Judge Koeltl also reserved judgment on Mashinsky’s motion to exclude Celsius’ bankruptcy details from the trial, saying he would address the issue in pre-trial motions or during the trial itself.
Additionally, Mashinsky’s lawyers requested permission to question prospective jurors on their knowledge of FTX, citing the “toxic” reputation of the now-defunct exchange in the crypto industry and its potential impact on jury impartiality.
Mashinsky stepped down as Celsius CEO in September 2022. In July 2023, he was indicted on seven counts, including securities fraud, wire fraud, and conspiracy to commit fraud related to his activities at the platform. As of now, he remains free on $40-million bail until his trial. The former CEO allegedly earned $42 million in profits from the sale of CEL tokens.
Mashinsky’s lawyers sought to preserve testimony from six key witnesses, including former Celsius chief revenue officer Roni Cohen-Pavon, who recently pleaded guilty to charges in the same case.
The witnesses, many of whom reside outside the U.S., are expected to play a critical role in Mashinsky’s defense, with claims that they ignored his instructions regarding CEL token sales.
Meanwhile, Celsius filed for bankruptcy in July 2022, and creditors began receiving repayments in 2024. In addition to the criminal case, Mashinsky is also facing civil lawsuits from the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
Cohen-Pavon, who initially pleaded not guilty before changing his plea, is expected to be sentenced on Dec. 11. He has been restricted to traveling between New York and Israel since his arrest, with limited permission to attend events such as the Token2049 conference in Singapore.
Prosecutors allege that Mashinsky and Cohen-Pavon manipulated the price of CEL by spending millions to buy the tokens, artificially inflating their value before selling for profit.
