Author: Sincerity Jahswill

A New York court has summoned Alex Mashinsky, the former CEO of crypto lending and borrowing platform Celsius, for oral arguments related to his motion to dismiss charges. Interestingly, this would be the first time to appear in person for the fraud case in several months.

The order comes after the former executive filed to dismiss certain charges. He is expected to appear in court along with his prosecutor on November 13. Judge John Koeltl signed the order and will preside over the case on the set date.

Machinsky’s Fraud Case

Mashinsky’s troubles began in July last year when he was arrested and charged. Investigators alleged that he and fellow executive Roni Cohen-Pavon manipulated the price of Celsius’s native token, CEL. This manipulation allegedly allowed Mashinsky to earn nearly $42 million in profits from token sales.

Prosecutors also accused Mashinsky of misleading users about the nature of their investments. By allegedly concealing Celsius’s financial struggles, Mashinsky purportedly deceived investors, further worsening the platform’s downfall. 

Mashinsky currently faces seven criminal charges, including commodities fraud, market manipulation, and securities fraud. His legal team recently filed motions to dismiss certain charges, which the upcoming court hearing on November 13 will address.

Mashinsky’s upcoming court hearing on November 13 may also consider his request to preserve testimony from six key witnesses, including Cohen-Pavon, who lives outside the U.S. His attorneys claim these individuals disregarded instructions to sell CEL tokens for revenue, opting to buy more on FTX throughout 2021.

Success to Struggle

Celsius experienced rapid growth, reaching $10 billion in customer assets and billions in loans by 2020. By May 2022, the company boasted 1.7 million users, $11.7 billion in assets under management, and $8 billion in loans. It attracted customers with high annual percentage yields (APYs) of up to 18% on crypto deposits. Users also boosted rewards by staking their CEL tokens.

Unlike traditional financial institutions, Celsius was not covered by customer protection programs. When the crypto market went bearish, the firm lacked a safety net, leaving customers vulnerable and unprotected. Recently, it distributed $2.5 billion to 251,000 creditors as part of its bankruptcy plan.

Nishad Singh, FTX’s former engineering chief, is asking a Manhattan federal judge to spare him from prison time for his role in the crypto exchange’s collapse.

According to a recent Bloomberg report, Singh’s lawyers made the plea in a memo filed with the court, citing the circumstances of his case.

Why Plead for Mercy?

Singh’s attorney believes he should be exempt from a prison term due to his cooperation with the government and his testimony against Sam Bankman-Fried. Singh has pleaded guilty to six charges and has been working with prosecutors to bring down others involved in the FTX scandal.

During Singh’s October 2023 testimony, he claimed that he was blindsided and horrified when he discovered the extent of Alameda’s misuse of FTX customer funds. He also claimed to feel betrayed by Bankman-Fried’s response when confronted about it. He exposed that FTX founder downplayed the issue and told him that they were a little short on deliverables.

Given Singh’s cooperation and his expression of remorse, his lawyers defend that he has taken significant steps to make amends and should be spared a prison sentence.

They wrote in the sentencing commendation:

“His circumstances are extraordinary in every way that matters to sentencing: his personal history and characteristics, his role in the charged offenses, the speed with which he cooperated, his response to the collapse of FTX, and how he has rebuilt his life since then.”

Notably, Singh’s cooperative stance throughout the case proceedings is a common legal strategy that parallels the approach taken by Binance’s Changpeng Zhao. Cooperation with authorities has often led to more lenient sentencing.

Other FTX Executives Sentenced

Ryan Salame, a former executive at FTX, has been sentenced to 7.5 years in prison and ordered to pay an $11 million fine, consisting of $6 million in forfeiture and $5 million in restitution. 

This sentencing comes after Sam Bankman-Fried’s conviction, who received a 25-year prison sentence, three years of supervised release, and an $11 billion forfeiture for defrauding FTX investors of over $1.7 billion.

Caroline Ellison, former CEO of Alameda Research and high-ranking executive at FTX, was also sentenced to two years in prison for her role in the FTX fraud. She worked closely with SBF, to mismanage user funds, leading to the downfall of the crypto exchange.

Radiant Capital, a multi-chain DeFi lending protocol, recently suffered a significant security breach, losing $53 million. The exploit occurred across two blockchain networks, Binance Smart Chain (BSC) and Arbitrum.

Radiant Capital Acknowledges Exploit

Ironically, the incident struck the protocol during its RIZ BSC market launch celebration. While the protocol shared event updates, malicious actors exploited vulnerabilities. This highlights the need for vigilance during milestone events as joyous moments can also present opportunities for bad actors to strike.

After a few hours into the attack, the protocol acknowledged technical issues affecting its lending markets BSC and Arbitrum. In response, the protocol claimed to collaborate with security experts including SEAL911, Hypernative, ZeroShadow, and Chainalysis to swiftly resolve the matter.

As a precautionary measure, lending markets on Base and Ethereum have been temporarily suspended until further notice. They further urged users to revoke affected contracts using revoke.cash.

What Happened?

According to insights from blockchain security auditor QuillAudits, the Radiant Capital exploit occurred when an attacker gained control of three out of eleven signer accounts, allowing them to execute malicious transactions. This vulnerability enabled the attacker to steal funds by swapping several tokens for the native coins in each affected network.

Notably, fourteen days before the attack, the attacker created a contract crucial to the exploit. The attacker then used this contract to call a multi-call function, which executed multiple transactions simultaneously.

By exploiting the multi-call function, the attacker took ownership of Radiant Capital’s contract, echoing the DeltaPrime hack. This granted them control over the platform’s funds. Subsequently, the attacker drained $53 million from Radiant Capital’s pools, transferring the funds to their addresses.

Can Protocol Recover?

Radiant Capital’s recent hack has put its financial stability to the test. With a yearly revenue of $3.39 million, it is facing a significant shortfall compared to the $53 million lost in the exploit. This substantial gap raises concerns about their ability to recover from the breach.

Meanwhile, the hack’s impact on the protocol’s native token, RDNT, has been drastic, with its value plummeting over 11%. This sharp decline reflects the market’s diminished confidence in the protocol’s security.

Ancilia Shares Malicious Link to the Exploit Victims

The first crypto security firm to alert users about the exploit, Ancilia mistakenly shared a link to a crypto wallet drainer while attempting to assist users affected by the Radiant Capital exploit. Pseudonymous X user shared a screenshot of Ancilia’s now-deleted post.

The incident occurred as Radiant Capital users rushed to revoke permissions following the lending protocol’s hack. Ancilia’s instructions to “follow the link from this official message” put users at greater risk.