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.
