Alex Mashinsky, the founder and former CEO of crypto lender Celsius, is making a legal push to have the Federal Trade Commission (FTC) drop its case against him. In a recent court filing on Monday, Mashinsky’s legal team argued that the FTC’s allegations lack the required elements to support their claims that he misled investors.
This legal maneuver comes after Celsius filed for bankruptcy last year amid the crypto market’s challenging conditions. Mashinsky’s legal troubles escalated when he was arrested in July following a coordinated effort by the FTC, the Department of Justice, and securities and commodities regulators.
Mashinsky, who has previously pleaded not guilty to charges including fraud and manipulating the price of the CEL token, has consistently maintained that these allegations are “baseless.” His legal team has now expanded their defense by urging the court to dismiss the FTC’s claims related to investor deception.
The specific argument put forth by Mashinsky’s lawyers revolves around whether he knowingly made misstatements with the intention of fraudulently obtaining customer information from a financial institution. This allegation hinges on the 1999 Gramm-Leach-Bliley Act, which requires that such misstatements be made with fraudulent intent.
Former Celsius CEO vs. FTC
Furthermore, Mashinsky, alongside his former Chief Technology Officer, Hanoch “Nuke” Goldstein, has taken issue with the FTC’s approach to novel cases like marketing fraud. In their separate filing, Goldstein claimed that he was unjustly held accountable due to his association with other Celsius executives. The FTC’s case against him appears to rely on the fact that he retweeted a blog post by Celsius, an action he believes should not make him culpable.
Meanwhile, in a parallel legal development, U.S. Attorney Damian Williams has requested that the court temporarily halt the FTC proceedings to prevent any potential biasing of the ongoing criminal case against Mashinsky. This request highlights the intricate legal web surrounding Mashinsky and the various legal actions brought against him.
Mashinsky’s resignation as CEO of Celsius in September 2022 came in the wake of the company’s bankruptcy filing in July. Following his arrest, he was released on a substantial $40 million bond. Additionally, a recent court order froze his banking and real estate assets, adding to the complexity of his legal situation.
