A former executive of a now-defunct cryptocurrency firm, Celsius Network, will have to continue his legal battle as a US federal court has denied his request to dismiss the charges against him.
It may seem like just a legal battle from a former crypto CEO, but in the bigger picture it is a reflection of the story of government oversight of the digital currency industry.
Motion rejected
The ex-CEO of Celsius Network, Alex Mashinskyfailed to convince a US federal judge to drop two charges against him related to crypto price manipulation and fraud.
Judge rejects ex-Celsius CEO’s attempt to drop fraud charges
The latest twist in the Celsius saga: Alex Mashinsky, former CEO of Celsius, just had his motion to dismiss key charges denied by a federal judge.
Mashinsky, who faces seven charges, tried to argue that two of… pic.twitter.com/oEa3SkFdHe
— IBC Group official (@ibcgroupio) November 11, 2024
Judge John Koeltl of the United States District Court for the Southern District of New York rejected Mashinsky’s motion asks the court to dismiss the two rape charges against him. So Mashinsky will still face the seven complaints related to his role at Celsius in January 2025 – a setback that made it inevitable for Mashinsky to defend himself in court when the trial began.
Koeltl ruled that the crypto exec’s arguments for dropping the cases were “disputable or unfounded.”
Mashinsky’s argument
Mashinsky’s lawyers argued that their client cannot be charged with violations of the Commodity Exchange Act and the Securities Exchange Act of 1934, and say the court is charging the former CEO with two counts of the same conduct.
Source: US District Court for the Southern District of New York
Koeltl, however, disagreed with their argument, saying that a conviction for violating the Securities Exchange Act would not mean Mahinsky would be acquitted of violating the Commodity Exchange Act.
Mahinsky also claimed that the commodity tax is “legally insufficient,” explaining that prosecutors failed to sufficiently allege that the platform’s investors were depositing Bitcoin into a program that offered a weekly rewards scheme. The federal judge argued that this argument is a question of fact that “cannot be resolved” at this point in the case.
BTCUSD trading at $86,340 on the daily chart: TradingView.com
Koeltl also denied Mashinsky’s proposal to dismiss the market manipulation charges, saying it is “meritless.” The judge added that the U.S. Court of Appeals for the Second Circuit has previously held that “open market transactions that are not inherently manipulative may constitute manipulative activity when accompanied by manipulative intent.”
Celsius: legal problems
Celsius used to be a prominent crypto platform in the industry. Unfortunately, the company went bankrupt in 2022 after customer withdrawals were frozen. The company also filed for bankruptcy due to the huge deficit on its balance sheet.
As a result, the SEC accused Mashinsky of fraud and manipulating the market, which caused the collapse of the crypto company.
State authorities said the crypto CEO misled investors and claimed that CEL, the company’s coin, was more secure than it was.
If convicted of all seven charges, Mashinsky could spend 115 years in state prison. The former CEO has not yet pleaded guilty to these charges.
Featured image from Public Policy Institute of California, chart from TradingView