Celsius Founder Mashinsky Seeks Former Employees to Testify in Fraud Trial

A past Celsius CEO currently serving a prison term of over 100 years seeks testimony from six former employees. Such is the case of Mashinsky, who was charged last occurring year for defrauding customers and falsely portraying the financial position of Celsius.

He has asked for these witnesses to be heard in his criminal case. Those supporting this claim, as per a memorandum filed by his attorneys on Friday, include the former CFO and CRO of the company.

“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 relied on information provided to him by the experienced team of Celsius professionals around him. The stakes are high. The government has informed the defense that its ‘current position’ is that the Sentencing Guidelines call for Mr. Mashinsky to receive a sentence of 115 years in prison.” 

Celsius has been the subject of regulatory oversight for a great many years; in fact, in 2022 the company declared bankruptcy, while this year it has been completely liquidated. In July 2023, the Securities and Exchange Commission (SEC) sued the crypto lender and its manager, Alex Mashinsky, claiming they appropriated billions of dollars via unlawful cryptocurrency offerings, misrepresentation of Celsius’ health to investors, as well as price fixing of CEL coins.

One of the proposed witnesses is Roni Cohen-Pavon, ex-Chief Revenue Officer of Celsius, who pleaded guilty to counts last year. Cohen-Pavon and other company employees ignored the instructions of Mashinsky and attempted to sell CEL tokens through repurchase while buying more instead of selling.

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

American prosecutors have shown evidence that Mashinsky and Cohen-Pavon planned together how to increase the price of CEL before selling them.

Mashinsky’s lawyers added:

“Mr. Cohen-Pavon is a material witness on the manipulation charges because he provided legal advice to Celsius regarding the manner in which it purchased and sold CEL tokens in the open market from 2019 through 2022,” Mashinsky’s lawyers said in the filing.”

According to Alex Mashinsky’s lawyers, during the weekly “Ask Mashinsky Anything” live events, Celsius’s legal and risk teams edited the content without notifying him. Celsius’ legal, risk, and regulatory teams reviewed transcripts of the AMA sessions before posting them, according to his defense.

As per the lawyers, Mashinsky had every reason to believe any inaccuracies in his public statements would be corrected. Mashinsky accepted the corrections, showing good faith rather than fraud, they claim.

However, the defense also stated that these corrections were almost always made without Mashinsky’s knowledge.

Also, the Celsius Network Litigation Administrator filed a lawsuit in the United States Bankruptcy Court for the Southern District of New York in July. The complaints were directed at a group of Celsius account holders who had allegedly received “preferential transfers.”

This group included those with more than $100,000 in Withdrawal Preference Exposure (WPE) who had not settled their preference liabilities. The filing named over 1,300 individuals and entities worldwide, including investment funds and companies

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Teuta

Teuta is a seasoned writer and editor with over 15 years of experience in macroeconomics, technology, and the cryptocurrency and blockchain industries. Starting her career in 2005 as a lifestyle writer for Cosmopolitan in Croatia, she expanded into covering business and economy for several esteemed publications like Forbes and Bloomberg. Influenced by figures like Don Tapscott and Bruce Dickinson, Teuta embraced the blockchain revolution, believing crypto to be one of humanity’s most crucial inventions. Her fintech involvement began in 2014, focusing on crypto, blockchain, NFTs, and Web3. Known for her excellent teamwork and communication skills, Teuta holds a double MA in Political Science and Law, enjoys punk rock, chablis, and has a passion for shoes.

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