Former Celsius CEO and creator Alex Mashinsky pleaded not guilty to allegations of deceiving investors and artificially inflating the value of the CEL token hours after his arrest.
Separate lawsuits were brought against Mashinsky and Celsius by the CFTC, the FTC, and the SEC on the same day. Seven charges, including securities and wire fraud, were filed against him by the Department of Justice.
US Magistrate Judge Ona Wang granted Mashinsky’s release on a $40 million bond, secured by his Manhattan residence and the signatures of his wife and another individual. The bond restricts his travel to the Eastern and Southern Districts of New York.
During his arraignment at Manhattan federal court, Mashinsky appeared without handcuffs, dressed in a gray polo shirt and jeans. Blockworks has reached out to Mashinsky’s attorneys for comment, while his lawyer, Jonathan Ohring, stated that Mashinsky intends to vigorously defend himself in court against what he considers baseless charges.
Celsius, founded in 2017, faced bankruptcy in July 2022 as customers hurried to withdraw funds amidst declining cryptocurrency prices. However, many depositors still struggle to access their funds. Prosecutors allege that between 2018 and 2022, Mashinsky deceived investors about critical aspects of Celsius’ operations.
The SEC accuses Mashinsky and Celsius of portraying the platform as a secure modern-day bank while engaging in risky strategies to offer high returns through their Earn Interest Program, reaching up to 17%.
Despite substantial losses and withdrawal pressures, regulators assert that Mashinsky and Celsius falsely presented the platform as financially stable and capable of meeting withdrawal demands.
The indictment reveals Mashinsky’s extensive promotion of Celsius through media interviews, Twitter, and regular “Ask Mashinsky Anything” sessions on the company’s website and YouTube channel.
In addition to the recent charges, New York Attorney General Letitia James previously sued Mashinsky in state court, accusing him of misleading thousands of investors, including 26,000 New Yorkers.
As the legal battle intensifies, Mashinsky’s plea sets the stage for what promises to be a complex and closely-watched court case. The outcome could have significant implications for the future of Celsius and the broader crypto industry.
