The former CEO of bankrupt cryptocurrency lender Celsius Network, Alex Mashinsky, has pleaded not guilty to fraud charges in New York. Prosecutors accuse Mashinksy of misleading customers to inflate the value of Celsius’s proprietary token. CEL.
Mashinsky faces seven criminal counts, including wire fraud, securities fraud, and commodities fraud, according to a Reuters report. Prosecutors claim he undertook a calculated, years-long scheme to exploit customers for a $42 million gain. However, the accused’s lawyer, Jonathan Ohring, says that Mashinsky strongly denies the allegations.
“Over the course of the past year, we have worked quickly to get to the bottom of what led to Celsius’s collapse,” Damian Williams, the US Attorney for the Southern District of New York, told a press conference. “To understand how a platform that advertised itself as the ‘safest place for your crypto’ could have left investors holding billions of dollars in losses. Today we have the answer.”
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Celsius Joins a Long List of Legal Debacles
Celsius dramatically collapsed in the summer of 2022 after months of frantic speculation from its customers. The company was one of the many to take a hit when the TerraUSD stablecoin imploded.
And the latter is a dramatic failure that comes with its own legal drama. Although, following weeks of uncertainty, the Celsius Network filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Southern District of New York.
On June 13, Celsius froze customer withdrawals, swaps, and transfers in response to “extreme market conditions.” Shortly after, on July 3, Celsius let go of approximately 23% of its workforce.
So far, 2023 has been a year of broad legal repercussions for the crypto industry. Among others, Do Kwon, the founder of Terraform Labs and the issuer of TerraUSD, is currently awaiting trial in the US and South Korea.
Authorities in Montenegro jailed Kwon on passport fraud, ending his run as a fugitive from justice.
Then, in June, the SEC accused the two largest crypto exchanges, Coinbase and Binance, of securities fraud.
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