Celsius Founder Alex Mashinsky Wants FTC Case Dismissed

Updated: 12 September 2023

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Alex Mashinsky, founder of bankrupt crypto lender Celsius, filed a motion to dismiss a case brought against him by the Federal Trade Commission (FTC).

Mashinsky was charged in July with multiple counts of fraud and market manipulation, when his lawyers labelled the charges against him “baseless.” They added that Mashinksy was looking forward to “vigorously defending himself in court.”

Now they say the case should be dismissed. The allegations do not support a claim that Mashinsky knowingly made a misstatement to fraudulently obtain customer information from a financial institution, as is required under a 1999 law known as the Gramm-Leach-Bliley Act, his lawyers said in the filing, emphasizing that the charge fails to meet this criterion.

Celsius Had Already Declared Bankruptcy

The lawyers pointed out that Celsius had already declared bankruptcy and reached a settlement agreement with the FTC. They asserted that Mashinsky resigned from his role as CEO of Celsius on September 27, 2023, which they argued weakens any claims of ongoing or possible legal violations on his part.

Celsius founder and former Chief Revenue Officer charged in connection with multibillion-dollar fraud and market manipulation schemeshttps://t.co/zyUODJAqk5

— US Attorney SDNY (@SDNYnews) July 13, 2023

Celsius CTO Also Challenges Charges

The lawsuit also saw Celsius former Chief Technology Officer Hanoch “Nuke” Goldstein challenge the charges against him. He claimed that the FTC is unfairly assigning blame to him due to his connections with other Celsius executives and retweeting a blog by Celsius.

Mashinky supports Goldstein’s motion to dismiss the case. “Accordingly, the court should grant Mashinsky’s motion and dismiss the complaint against him in its entirety,” the lawsuit read.

Temporarily Halt FTC Proceedings

At the same time, U.S. Attorney Damian Williams requested that the court temporarily halt the FTC proceedings in order to avoid any potential bias that could affect the ongoing criminal case involving Mashinsky.

The Celsius founder stepped down as CEO in September last year following the company’s bankruptcy filing in July. After his arrest, he was released on a $40 million bond, and last month, a court froze his assets, which include various bank accounts and a property in Texas.

Submitted in court on Monday, this motion comes after Celsius found itself in financial trouble last year amid the cryptocurrency market’s downturn, ultimately filing for bankruptcy.

He had previously entered a plea of not guilty to charges of securities fraud, wire fraud, market manipulation, conspiracy to manipulate the price of CEL, commodities fraud, and fraudulent schemes to manipulate customers.