Emily Walker
A former top executive of the collapsed cryptocurrency company Celsius Network will continue facing legal issues as a U.S. federal court has rejected his bid to dismiss the allegations against him.
While it may appear as a mere clash involving a former CEO in the crypto space, it represents a broader scrutiny from the government concerning the digital currency industry.
Rejection of Motion
Alex Mashinsky, the ex-CEO of Celsius Network, was unable to persuade a U.S. federal judge to drop two criminal charges relating to alleged price manipulation and fraud.
Judge Rejects Ex-Celsius CEO’s Attempt to Drop Fraud Charges
The latest twist in the Celsius saga: Alex Mashinsky, former CEO of Celsius, just had his motion to dismiss key charges thrown out by a federal judge.
Mashinsky, who faces seven charges, tried to argue that two of… pic.twitter.com/oEa3SkFdHe
— IBC Group Official (@ibcgroupio) November 11, 2024
Judge John Koeltl of the Southern District of New York dismissed Mashinsky’s request to eliminate two of the charges, meaning he must deal with five other allegations starting January 2025. This ruling signals that Mashinsky will need to prepare to defend himself in court.
Koeltl stated that the reasoning presented by Mashinsky was either irrelevant or unfounded.
Mashinsky’s Defense
In his defense, Mashinsky’s legal team argued that charging him with breaches of both the Commodity Exchange Act and the Securities Exchange Act of 1934 for the same action was unjustified.
However, Judge Koeltl countered, clarifying that a conviction for violating the Securities Exchange Act does not exempt Mashinsky from the charges under the Commodity Exchange Act.
Mashinsky also contended that the charge tied to commodities lacks sufficient legal basis, indicating that prosecutors did not adequately demonstrate that investors were depositing Bitcoin into a program promised to yield weekly rewards. The judge remarked that this point is a factual matter that can’t be settled at this stage of the proceedings.
Furthermore, Koeltl dismissed Mashinsky’s arguments against the market manipulation charges, deeming them groundless. The judge pointed out that previous rulings by the U.S. Court of Appeals for the Second Circuit have established that transactions on open markets are not inherently manipulative but could indicate manipulative intent.
Legal Challenges for Celsius
Celsius once held a significant position in the cryptocurrency sector. However, the firm faced a meltdown in 2022 when it halted customer withdrawals and subsequently declared bankruptcy due to substantial losses.
In the aftermath, the SEC brought charges against Mashinsky for fraud and market manipulation, which allegedly led to the company’s downfall.
Regulatory bodies claim that Mashinsky misled investors, inflating the safety of the firm’s cryptocurrency, CEL.
If found guilty of all seven allegations, Mashinsky risks a prison sentence of up to 115 years. He has not yet entered a plea regarding these charges.
Featured image from Public Policy Institute of California, chart from TradingView