July 14, 2023 at 16:14 GMTModified date: July 14, 2023 at 16:14 GMT
July 14, 2023 at 16:14 GMT

Mashinsky pleads not guilty to fraud charges

Within a day of being arrested in NY, Alex Mashinsky, the CEO of the now-defunct crypto platform Celsius Network, has pleaded not guilty to charges of fraud.

Mashinsky pleads not guilty to fraud charges

Within a day of being arrested at his New York residence, Alex Mashinsky, the CEO of the now-defunct crypto lending platform Celsius Network, has pleaded not guilty to the charges of fraud.

News of his arrest made the rounds yesterday as federal prosecutors filed seven charges against him and Celsius’ former chief revenue officer, Roni Cohen-Pavon. The charges bordered on securities, commodities, wire fraud, misleading investors and artificial inflation of CEL, the native crypto of Celsius Network.

Speaking on the nature of the charges, U.S. Attorney Damian Williams is quoted as saying: “Whether it’s old-school fraud or some new-school crypto scheme, it doesn’t matter one bit. It’s all fraud to us.

“The message we send today is quite simple: If you rip off ordinary investors to line your own pockets, we will hold you accountable,” he said 

In the document filed yesterday to the United States District Court, Southern District of New York, federal prosecutors alleged that: “Defendants (Celsius and Mashinsky) falsely promised investors a safe investment with high returns…..they misled investors about the financial success of the business and fraudulently manipulated the price of CEL token.”

The indictment further accused the defendants of lying about how it generated interest, the number of users of the platform and for falsely assuring investors that their funds were insured.

Defence counsel, Jonathan Ohring dismissed the allegations, terming them as baseless. He told CNBC: “Alex vehemently denies the allegations brought today. He looks forward to vigorously defending himself in court against these baseless charges.”

Following the proceeding, U.S. Magistrate Judge Ona Wang concluded that Mashinsky would be released on a $40million bond.

Celsius Network filed for bankruptcy in July 2022 shortly after the unfortunate downfall of 3AC and Voyager, amidst the downturn of the cryptocurrency market.

FTC reach settlement with Celsius Network

Yesterday, Celsius Network reached an agreement with the Federal Trade Commission (FTC) after the commission sought a stipulated order for permanent injunction, monetary judgement and other relief against the defunct company.

The proposed settlement restricts Celsius and its affiliates from offering any services related to cryptocurrency transactions, including deposits, exchanges, investments, and withdrawals. 

The settlement also includes a $4.7bn judgement, suspended for asset return during bankruptcy proceedings, while the case against the executives proceeds in federal court.

Celsius Network is facing similar lawsuit against the U.S. Commodity and Futures Trading Commission (CFTC) and another filed by New York attorney general Letitia James.