A judge has ordered several bank accounts and a residential property belonging to former Celsius CEO Alex Mashinsky to be frozen, according to newly unsealed court documents.
The asset freeze comes as Mashinsky faces criminal charges for allegedly defrauding Celsius investors. He was arrested in July on multiple counts, including securities fraud, but he maintains his innocence.
Judge Quietly Froze Assets to Stop Mashinsky Draining Funds
Judge Jed Rakoff secretly forbade financial institutions on August 16 from selling assets held in certain Goldman Sachs accounts under Mashinsky’s name. The court order also froze a home in Austin, Texas, associated with the embattled crypto mogul.
Prosecutors convinced Rakoff to initially seal the asset freeze to prevent preemptive emptying of the accounts. But this week, the judge agreed to make his ruling public.
The asset freeze blocks Mashinsky from accessing savings and real estate at a time when he desperately needs liquidity to pay for his legal defense. The former Celsius chief won release on a $40 million bond following his July 13 arrest. Mashinsky pleased not guilty to multibillion-dollar fraud and market manipulation schemes the following day.
Prosecutors allege that Mashinsky portrayed Celsius as a bank where investors could safely deposit crypto and earn interest. But in reality, he allegedly operated a risky investment fund while lying about its financial position.
Celsius Network halted withdrawals, swaps, and transfers between accounts on June 12, 2022, due to extreme market conditions, then filed for Chapter 11 bankruptcy protection on July 13, 2022, after failing to raise enough capital to stabilize operations.
Mashinsky Allegedly Made False Statements About CEL Sales
The DOJ indictment further accuses Alex Mashinsky of making false public statements about the sales of CEL, Celsius’s native token. If convicted on multiple fraud counts, he and Celsius executive Roni Cohen-Pavon face years in prison.
Mashinsky continues to fight all charges, and his lawyers claim the accusations are “baseless.”
Regulators claim the firm’s CEL token and Earn product constituted unregistered securities illegally sold to retail customers. The SEC, CFTC, and FTC have all filed suits against Mashinsky as they continue probing Celsius.
For now, Mashinsky must fight prosecutors without access to his savings or real estate holdings. The asset freeze secured by Judge Rakoff ensures the government can pursue potential fines and restitution if the former crypto billionaire is convicted.
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Source: https://beincrypto.com/judge-freezes-assets-celsius-alex-mashinsky/