The co-founder and former CEO of Celsius Network – Alex Mashinsky – has reportedly pleaded not guilty to the allegations that he and his entity defrauded customers over the years and artificially inflated the value of CEL (the native token of the organization).
The man, arrested on July 13, was set free on a $40 million bond secured by his residence in Manhattan, New York.
The Charges vs. Mashinksy’s Claim
According to numerous sources, US law enforcement agents delayed Mashinsky following an investigation into the collapse of the now-bankrupt crypto lender Celsius Network. American magistrates subsequently charged him with seven criminal counts, including securities, commodities, and wire fraud, adding that he scammed customers and misled them about the firm’s business.
In addition, the accused accused Mashinsky and Roni Cohen-Pavon (Celsius’ CRO) of manipulating the price of CEL so they could offload their holdings at a higher value.
“Mashinsky portrayed Celsius as a modern-day bank where customers could safely deposit crypto assets and earn interest. In truth, however, Mashinsky operated Celsius as a risky investment fund, taking in customer money under false and misleading pretenses and turning customers into unwitting investors in a business far riskier and far less profitable than what Mashinsky had represented,” the indictment reads.
The entrepreneur pleaded not guilty to the charges. Moreover, his attorney, Jonathan Ohring, said his client “vehemently denies the allegations” and “looks forward to vigorously defending himself in court.”
Mashinsky was later released on a $40 million bond. His high-end residence in Manhattan secured the financing.
His case somewhat reminds of the one against the former CEO of FTX – Sam Bankman-Fried. The authorities allowed the 31-year-old American to live at his parents’ house under a $250 million bond until the trial on October 2.
SEC, FTC, and CFTC Press Charges, too
Some of the leading financial regulators of the States have also insisted that Mashinsky and his brainchild Celsius Network violated laws.
For one, the Federal Trade Commission (FTC) announced a settlement with the company, insisting the latter pay the staggering $4.7 billion in penalties for its alleged fraudulent activities.
“Celsius touted a new business model but engaged in an old-fashioned swindle. Today’s action banning Celsius from handling people’s money and holding its executives accountable should make clear that emerging technologies are not above the law,” Samuel Levine – Director of the FTC’s Bureau of Consumer Protection, added.
However, the multi-billion payment will be temporarily suspended so Celsius Network can return its remaining assets to consumers in bankruptcy proceedings.
The FTC clarified that Mashinsky and two other former executives of the crypto lender have not agreed with the proposed terms, meaning the case against them will proceed in federal court.