Lawyers representing former Celsius CEO Alex Mashinsky filed a motion in federal court requesting a judge drop charges related to commodities fraud and market manipulation.
In a Jan. 12 filing in the United States District Court for the Southern District of New York, Mashinsky’s legal team filed a motion to dismiss two felony counts the former Celsius CEO will likely face at trial in September 2024. According to the filing, the second count of commodities fraud was “repugnant” and “inconsistent” with the first count of securities fraud based on the government’s treatment of crypto.
“It is inconsistent and illogical to view the Earn Program as a security for purposes of Count One, and a commodity for purposes of Count Two,” said the filing. “It is not clear if the government intends to argue that Celsius’s Earn Program constituted the purchase of a security and the sale of a commodity at the same time [...] the government cannot have it both ways and the appropriate remedy is dismissal of one of the counts.”
Mashinsky’s lawyers also argued that the court should dismiss count six of market manipulation “for lack of fair notice,” claiming the U.S. government “invent[ed]” a criminal offense for a civil violation. In addition to petitioning the judge to drop two of the seven criminal charges the former CEO faces, the legal team asked that information related to Celsius’ bankruptcy not be included in the case:
“References to Celsius’s bankruptcy should be stricken from the Indictment. For the same reasons, the government should be precluded from introducing evidence of the Celsius bankruptcy during trial.”
Related: Former Celsius CEO Mashinsky seeks dismissal of FTC case
Celsius was one of many crypto firms that filed for bankruptcy in the United States in 2022 amid a market downturn, including BlockFi and FTX. Mashinsky resigned as CEO in September 2022 and was indicted on seven felony counts in July 2023, including securities fraud, wire fraud and conspiracy to commit fraud.
Mashinsky remains free on $40-million bail at the time of publication. Former FTX CEO Sam Bankman-Fried, another high-profile figure in the crypto space, was convicted of seven felony counts in November 2023 and awaits sentencing. Former Binance CEO Changpeng Zhao pleaded guilty to one felony count as part of an agreement with U.S. authorities. He is restricted from leaving the United States until his sentencing in February.
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