Celsius CEO Requests to Drop Two Charges Linked to Fraud and Manipulation

UTC by Bhushan Akolkar · 3 min read
Celsius CEO Requests to Drop Two Charges Linked to Fraud and Manipulation
Photo: Web Summit / Flickr

The court filing contends that the government’s handling of cryptocurrencies creates an inconsistency and contradiction between the second count of commodities fraud and the first count of securities fraud.

Legal representatives for former Celsius CEO Alex Mashinsky have filed a motion in federal court seeking the dismissal of charges related to commodities fraud and market manipulation.

The motion, filed on January 12 in the United States District Court for the Southern District of New York, urges the judge to drop two felony counts expected to be brought against Mashinsky at his trial in September 2024.

The filing argues that the second count of commodities fraud is “repugnant” and “inconsistent” with the first count of securities fraud, particularly in the government’s treatment of cryptocurrencies. The defense contends that it is illogical to view Celsius’s Earn Program as both a security and a commodity simultaneously, urging the court to dismiss one of the counts. The official filing notes:

“It is inconsistent and illogical to view the Earn Program as a security for purposes of Count One, and a commodity for purposes of Count Two. It is not clear if the government intends to argue that Celsius’s Earn Program constituted the purchase of a security and the sale of a commodity at the same time […] the government cannot have it both ways and the appropriate remedy is dismissal of one of the counts.”

Lawyers Demand Removal of Market Manipulation Charges

Furthermore, Mashinsky’s legal team has put forward arguments for the dismissal of count six, which pertains to market manipulation, citing “lack of fair notice”. They contend that the US government has essentially “invented” a criminal offense that otherwise stands as a civil violation.

Alongside seeking the dismissal of two out of the seven criminal charges facing the former CEO, the defense has also requested the exclusion of information related to the Celsius bankruptcy from the case. The filing notes:

“References to Celsius’s bankruptcy should be stricken from the Indictment. For the same reasons, the government should be precluded from introducing evidence of the Celsius bankruptcy during trial.”

In 2022, Celsius, alongside other crypto firms like BlockFi and FTX, filed for bankruptcy in the US amidst a challenging market downturn. Following his resignation as CEO in September 2022, Alex Mashinsky faced an indictment on seven felony counts in July 2023, including charges related to securities fraud, wire fraud, and conspiracy to commit fraud.

As of the current publication, Mashinsky is out on $40 million bail. Notably, other prominent figures in the crypto space have also faced legal actions, with former FTX CEO Sam Bankman-Fried convicted of seven felony counts in November 2023, awaiting sentencing. Additionally, former Binance CEO Changpeng Zhao has pleaded guilty to one felony count as part of an agreement with US authorities, with restrictions on leaving the United States until his sentencing scheduled for February.

Blockchain News, Cryptocurrency News, News
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