Judge denies ex-Celsius CEO’s bid to dismiss fraud, manipulation charges

Lawyers representing Alex Mashinsky, the former CEO of the crypto platform Celsius facing a criminal indictment in the United States, have lost a motion to drop two charges related to commodities fraud and manipulating the price of the Celsius (CEL) token.

In a Nov. 8 filing in the US District Court for the Southern District of New York, Judge John Koeltl ruled that Mashinsky’s legal team’s arguments to have the charges dismissed were “either moot or without merit.” The judge denied the motion to dismiss the two charges, leaving seven counts on the indictment for the former Celsius CEO’s trial, scheduled to begin in January 2025.

Source: SDNY

The former Celsius CEO’s lawyers claimed that the securities and commodities fraud charges were inconsistent, as prosecutors alleged the platform’s Earn Program was treated as a security while the Bitcoin (BTC) deposited by investors were commodities. Mashinsky also claimed that he lacked “fair warning” that allegedly manipulating the price of CEL (CEL) was a criminal charge.

The motion to dismiss the two charges filed in January included a request for Judge Koeltl not to allow information on Celsius’ bankruptcy to be included in the criminal case. The judge declined to decide on the motion on Nov. 8, suggesting he would respond to motions in limine or at trial. 

Questions about FTX for jurors

Following the Nov. 8 order, Mashinsky’s lawyers also requested they be allowed to ask prospective jurors questions about their knowledge of the defunct cryptocurrency exchange FTX. According to the legal team, there will “undoubtedly” be testimony about FTX at trial, and the exchange was “toxic in the cryptocurrency world.”

Related: Celsius token surges 300% a month after $2.5B payment to creditors

Authorities arrested and charged Mashinsky with seven felony counts in July 2023. He pleaded not guilty and has been free to travel with restrictions on a $40 million bond.

Former Celsius chief revenue officer Roni Cohen-Pavon, indicted alongside Mashinsky, also faces charges for “illicitly” manipulating the CEL price. Cohen-Pavon initially pleaded not guilty but later changed his plea to guilty. He is scheduled to be sentenced on Dec. 11.

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