Celsius Founder Mashinsky Seeks Former Employees to Testify in Fraud Trial

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As a seasoned crypto investor with over a decade of experience navigating the volatile world of digital assets, I find myself following the Celsius case with a mix of disbelief and sadness. Having lost my hard-earned savings in similar scams in the past, the story of Alex Mashinsky and his alleged fraudulent activities resonates deeply with me.

The former Celsius CEO, currently incarcerated for a sentence exceeding 100 years, is attempting to secure testimonies from six ex-employees. This refers to Mashinsky, who was indicted last year for swindling customers and misrepresenting the financial status of Celsius.

In his criminal case, he requests that the testimonies of these specified witnesses be considered. According to a memorandum submitted by his legal team last Friday, among those backing this assertion are the ex-Chief Financial Officer and Chief Risk Officer of the corporation.

“I Didn’t Mean Harm”: Mashinsky’s Defense in Celsius Fraud Case

Mashinsky’s counsel stressed that he did not seek to do anything harm to anyone.

According to his lawyers:

As the CEO of Celsius, Mr. Mashinsky heavily depended on the knowledge shared by his seasoned team of professionals within the company. The situation is critical, as the government has notified the defense that their current stance is that the Sentencing Guidelines suggest a sentence of 115 years imprisonment for Mr. Mashinsky.

For quite some time, Celsius has been under regulatory scrutiny; in fact, it filed for bankruptcy in 2022 and was fully liquidated this year. In July 2023, the Securities and Exchange Commission (SEC) took legal action against the crypto lender and its CEO, Alex Mashinsky. The SEC alleged that they illegally obtained billions of dollars through unlawful cryptocurrency sales, misled investors about Celsius’ financial status, and manipulated the price of CEL coins.

Among the potential witnesses is Roni Cohen-Pavon, former Chief Revenue Officer of Celsius, who admitted guilt to certain charges last year. Cohen-Pavon, along with other company employees, disregarded Mashinsky’s instructions and attempted to offload CEL tokens through a repurchase scheme, instead of selling them as intended, by buying more instead.

Cohen-Pavon’s Legal Advice and Edited AMAs Key to Fraud Case

U.S. prosecutors have presented proof that Mashinsky and Cohen-Pavon conspired to artificially inflate the cost of CEL tokens prior to their sale.

Mashinsky’s lawyers added:

In their court filing, Mashinsky’s attorneys stated that Mr. Cohen-Pavon is considered a crucial witness due to his role in offering legal guidance to Celsius on the methods they employed when buying and selling CEL tokens between 2019 and 2022, which are under investigation for manipulation allegations.

As stated by Alex Mashinsky’s legal team, during his weekly “Ask Mashinsky Anything” live events, the transcripts of these sessions were edited by Celsius’s legal and risk teams without informing him prior to their posting. According to his defense, it was Celsius’s legal, risk, and regulatory teams who reviewed and made changes to the content of the AMA sessions before they were published online.

According to legal experts, Mashinsky felt justified in assuming that any mistakes in his public declarations would be rectified. Notably, Mashinsky agreed with these corrections, demonstrating honest intent instead of deception, as they argue.

Yet, the defense argued that such corrections were typically done without Mashinsky being informed.

Additionally, it was reported that the administrator responsible for the Celsius Network’s legal matters initiated a lawsuit within the United States Bankruptcy Court, specifically the Southern District of New York, in July. The accusations were aimed at certain Celsius account owners, who were suspected of receiving “favored transactions.

This collection encompassed people and organizations with over $100,000 in Withdrawal Preference Exposure (WPE), who had yet to fulfill their obligation regarding preference liabilities. The submission listed more than 1,300 individuals and entities across the globe, such as investment funds and corporations.

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2024-09-16 20:32