Alex Mashinsky, the founder of Celsius Network, was unable to have two fraud charges dropped from his indictment by a federal judge in New York. The charges relate to the alleged manipulation of the price of Celsius’s cryptocurrency, CEL token, through artificial means.
Mashinsky argued that certain charges were redundant and legally flawed, claiming that his actions could not violate both the Commodity Exchange Act and the Securities Exchange Act at the same time. However, Judge John G. Koeltl disagreed, stating that each charge could stand independently under the law.
One of the arguments that was dismissed focused on whether Celsius’s deposit program could be considered a commodity contract, as it offered rewards to investors who deposited Bitcoin. The judge decided that this issue could be addressed at a later time during the court proceedings.
The collapse of Celsius in 2022 is at the center of the case against Mashinsky. The once-prominent crypto lender went bankrupt after freezing customer withdrawals and facing a significant deficit on its balance sheet. Prosecutors claim that Mashinsky deceived investors and manipulated the price of the company’s native token, CEL, by falsely representing its safety.
Mashinsky is now facing trial in New York on seven criminal charges, including fraud, which could result in a 115-year prison sentence if he is found guilty. The trial commenced in September.
This case comes on the heels of the conviction of Sam Bankman-Fried, the founder of FTX, who was sentenced to 25 years in prison for similar charges. The outcome of Mashinsky’s trial will be closely watched by the crypto community and could have significant implications for the regulation of the industry moving forward.