Former Celsius CEO Alex Mashinsky is demanding that six former employees testify in a fraud case against him, accusing him of defrauding customers and misrepresenting Celsius’ financial condition.
My Intention Was Not To Cause Harm
Mashinsky’s lawyers said in a memorandum filed with the court on Friday that the people supporting the defense include the company’s former CFO and CRO. Mashinsky’s lawyers emphasized that he did not intend to harm anyone.
“As CEO of Celsius, Mr. Mashinsky relied on the information provided to him by the experienced Celsius experts around him.”
According to the defense, the current attitude of the former employees could result in Mashinsky receiving a sentence of 115 years in prison.
Celsius has been under regulatory scrutiny for many years; it declared bankruptcy in 2022 and was fully liquidated this year. In July 2023, the Securities and Exchange Commission (SEC) filed a lawsuit against Celsius and its director, Alex Mashinsky, for allegedly generating billions of dollars through the issuance of unregistered securities, misrepresenting Celsius’ status to investors, and manipulating the price of CEL tokens.
Are Celsius’ Employees Also Guilty?
One of the proposed witnesses is former Celsius Chief Revenue Officer Roni Cohen-Pavon, who pleaded guilty to the charges last year. Cohen-Pavon and other employees ignored Mashinsky’s instructions and bought more CEL tokens instead of selling them.
American prosecutors have presented evidence that Mashinsky and Cohen-Pavon conspired together to increase the price of CEL before selling it. Mashinsky’s lawyers added:
“Mr. Cohen-Pavon is a material witness in the manipulation allegations because he provided legal advice to Celsius regarding the purchase and sale of CEL tokens on the open market from 2019 to 2022.”
According to Mashinsky’s lawyers, Celsius’ legal and risk teams edited content from his weekly “Ask Mashinsky Anything” live events without notifying him. According to the defense, Celsius’ legal, risk and regulatory teams reviewed transcripts of AMA sessions before they were released.
The lawyers said Mashinsky had every reason to believe that any inaccuracies in his public statements would be corrected. They argued that Mashinsky had agreed to the corrections and that they showed good faith rather than fraud. But the defense also said that the corrections were mostly made without Mashinsky’s knowledge. In short, Celsius’ boss wants to share the blame with his employees.
Celsius Network’s Legal Battles Continue
In July, Celsius Network Litigation Manager filed a lawsuit in the United States Bankruptcy Court for the Southern District of New York, alleging that a group of Celsius account holders allegedly received “privileged transfers.”
This group included individuals with Drawing Privilege Exposures of over $100,000 who had defaulted on their preferred obligations. The application named more than 1,300 individuals and entities worldwide, including investment funds and corporations.
In summary, Mashinsky’s case has had a huge impact in the cryptocurrency world, and it is a matter of curiosity how the testimonies of former employees will affect the course of the case. Celsius’ bankruptcy and ongoing legal processes once again reveal the importance of regulation and transparency in the cryptocurrency sector.
Disclaimer: The information contained in this article does not contain investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
