Former Celsius CEO Alex Mashinsky Seeks to Quash U.S. FTC Case

By September 12, 2023 In Celsius

Alex Mashinsky, founder and former chief executive office of crypto lender Celsius, sought to have the Federal Trade Commission (FTC) drop its case against him in a Monday court filing.

Celsius filed for bankruptcy last year as the crypto winter set in, and Mashinsky was arrested in July following a joint move by the consumer-protection body, the Department of Justice, and securities and commodities regulators .

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He has previously pleaded not guilty to multiple counts of fraud and manipulating the price of the CEL token, charges his lawyers have said are “baseless.” Now they say the court should also dismiss FTC claims that he misled investors.

“The allegations do not support a claim that Mashinsky made 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, Mashinsky’s lawyers said in the Monday filing.

Mashinsky, alongside his former Chief Technology Officer Hanoch “Nuke” Goldstein, argued the FTC would need to make more rules before taking on novel cases such as marketing fraud. In a separate filing, Goldstein said he was being unjustly held guilty by association with other Celsius executives, with the FTC depending on the fact that he retweeted a blog by Celsius.

In parallel, U.S. Attorney Damian Williams asked the court to put FTC proceedings on hold to avoid prejudicing the parallel criminal case.

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Mashinsky resigned as CEO in September 2022 after the company filed for bankruptcy in July. He was released on a $40 million bond, and a court recently ordered his banking and real estate assets frozen.

Edited by Parikshit Mishra.

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Jack Schickler

Jack Schickler is a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.

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