Seeking Dismissal of US FTC’s Case

In the latest twist to the Celsius bankruptcy saga, founder Alex Mashinsky is requesting the court to dismiss the Federal Trade Commission’s (FTC) case against him.

Mashinsky Arrested on Multiple Fraud Counts

According to a Sept. 11 court motion, Mashinsky’s legal team argued that the FTC’s allegations do not contain the necessary elements to support a claim of fraudulent activity.

Celsius, a once-prominent crypto lending platform, filed for bankruptcy amidst challenging market conditions, which had legal consequences for Mashinsky. He was arrested in July following a coordinated attack by the FTC, the Department of Justice, and securities and commodities regulators. The charges against him include multiple counts of fraud and manipulating the price of the CEL token.

Mashinsky’s defense team is contesting these charges, dismissing them as “baseless.” They are calling for the court to drop the fraud allegations and the FTC’s claims that he misled investors. Specifically, Mashinsky’s legal counsels argue that the accusations do not meet the criteria for a claim under the Gramm-Leach-Bliley Act. This law necessitates knowingly false statements to obtain customer information from a financial institution fraudulently.

They also argue that he cannot be held accountable for violating the law as he resigned his position as the CEO of Celsius. His legal team insists that since Celsius is in bankruptcy and has already reached a settlement agreement with the FTC, further allegations against him cannot be substantiated.

Celsius’ Former CTO Contests FTC Charges

Adding to the complex legal situation, Mashinsky’s former Chief Technology Officer, Hanoch “Nuke” Goldstein, also denies the charges. Goldstein argues that the FTC unfairly implicates him due to his association with other Celsius executives.

The FTC’s case against Goldstein is based on his retweeting a blog post by Celsius, which he argues is being wrongly interpreted as him being complicit.

Meanwhile, US Attorney Damian Williams has requested that the court temporarily halt FTC proceedings to prevent prejudicing the parallel criminal case against Mashinsky. During the bankruptcy proceedings, Mashinsky, who stepped down as CEO in September 2022, was released on a $40 million bond. However, following a court order that froze his banking and real estate assets, his financial predicament continues to worsen.