Celsius founder Alex Mashinsky loses bid to dismiss charges

Alex Mashinsky, former CEO of the defunct Celsius Network, failed to have two fraud charges removed from his indictment.

A federal judge in New York ruled against Mashinsky’s motion under the Bloomberg Law alleging that Celsius manipulated the price of the cryptocurrency CEL token by artificially inflating it.

Mashinsky argued that some of the charges were unnecessary and legally flawed, and argued that his conduct could not simultaneously violate both the Commodity Exchange Act and the Securities Exchange Act.

But Judge John G. Koeltl rejected this, stating that each charge could stand alone under the law.

One of the rejected claims focused on whether Celsius’s deposit program qualified as a commodity contract that offered “rewards” to investors who deposited Bitcoin (BTC). The judge ruled that this issue could be addressed in court later.

2022 collapse of Celsius

Mashinsky faces charges of wire fraud and market manipulation in connection with Celsius’ 2022 collapse.

Celsius was once a leading crypto lender. But it collapsed in 2022 after a freeze on customer withdrawals and filing for bankruptcy due to a large balance sheet deficit.

Prosecutors allege Mashinsky misled investors and manipulated the company’s native token, CEL, by claiming it was safer than it actually was.

Mashinsky will be tried in New York on seven charges, including fraud, which could lead to a 115-year prison sentence if convicted. The trial started in September

His case follows the high-profile conviction of FTX founder Sam Bankman-Fried, who was sentenced to 25 years in prison on similar charges.