Alex Mashinsky, the founder and former CEO of the now-bankrupt cryptocurrency lender Celsius Network, has entered a not guilty plea to charges of fraud. He is accused of deceiving customers and manipulating the value of Celsius’s proprietary crypto token. The indictment, unsealed on Thursday, includes seven criminal counts, encompassing securities fraud, commodities fraud, and wire fraud.
This case is part of a series of legal challenges facing prominent figures in the cryptocurrency industry. Notably, Sam Bankman-Fried, founder of the collapsed exchange FTX, also faces fraud charges and has pleaded not guilty.
Mashinsky appeared in a federal court in Manhattan for his arraignment, where US Magistrate Judge Ona Wang set his release terms on a $40 million bond, secured by his Manhattan residence.
The indictment also involves Roni Cohen-Pavon, Celsius’s former chief revenue officer, charged with market manipulation of the company’s crypto token, Cel. Cohen-Pavon, currently abroad and an Israeli citizen, has not yet faced extradition proceedings.
Simultaneously, the US Securities and Exchange Commission (SEC) has filed a lawsuit against Mashinsky and Celsius. This lawsuit alleges that they raised billions through the sale of unregistered crypto securities and provided misleading information about the company’s financial status. Additionally, the Commodity Futures Trading Commission and the Federal Trade Commission have accused Mashinsky and Celsius of falsely promoting the platform as safe and stable, akin to traditional banking, while undertaking risky measures to fulfill high return promises of up to 17 percent.
According to the regulators, Celsius continued to assert its financial stability and capability to meet customer withdrawals even as it faced substantial losses and customer withdrawal surges. The SEC highlighted that Celsius used enticing marketing strategies, including phrases like “Pour Yourself a Cup of Profits” and “Profits in your Pocket,” to attract investments in its interest-earning program.
US lawyer Damian Williams emphasized the seriousness of the allegations, stating, “Whether it’s old-school fraud or some new-school crypto scheme, it doesn’t matter one bit. It’s all fraud to us.”
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