Former Celsius Network Ltd. CEO Alex Mashinsky is set to face a criminal trial on September 17, 2024, amidst a backdrop of serious allegations and financial turmoil.
Mashinsky’s legal troubles began in July when he was hit with a slew of charges, including securities fraud, commodities fraud, wire fraud, ponzi scheme investment fraud and conspiracy to manipulate the value of the Celsius token (CEL). His company, Celsius Network, had collapsed under the weight of more than $1 billion in debt.
During a recent hearing presided over by US District Judge John Koeltl, Mashinsky’s defense team hinted at a unique strategy: questioning whether a cryptocurrency should be classified as a security.
“The law about what is a security is fluid,” commented defense attorney Robert Frenchman.
Meanwhile, former Celsius Network executive Roni Cohen-Pavon had previously pleaded guilty to fraud charges and agreed to cooperate with prosecutors in their case against Mashinsky.
Alex Mashinsky Put on a $40 Million Bail
As of now, Alex Mashinsky remains free on $40 million bail, as ruled by a New York court. This decision holds throughout the legal proceedings, although it comes with certain travel and financial transaction restrictions.
Following his arrest, authorities alleged that Alex Mashinsky had misled Celsius investors and defrauded users out of substantial sums. This led to the freezing of many of his assets, including bank accounts and property, in September.
Celsius Network itself filed for bankruptcy in July 2022, while Mashinsky stepped down as CEO in September 2022. Legal actions by the U.S. Commodity Futures Trading Commission, Securities and Exchange Commission, and Federal Trade Commission have been initiated against both Celsius and Mashinsky.
Mashinsky’s legal woes have cast a long shadow over Celsius Network, leaving it heavily indebted. Prosecutors claim that both Mashinsky and Celsius artificially inflated the price of the company’s native token, CEL, using customer funds. They also allege repeated deception of their clientele.
Hope for Celsius Creditors
Despite the legal turmoil, there is a glimmer of hope for Celsius creditors. As Crypto Economy reported, they have approved a reorganization strategy that promises payments in cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) along with equity in a new corporate entity termed “NewCo.”