Celsius founder agrees to shared lawyers with Sam Bankman-Fried

Former Celsius CEO Alex Mashinsky has addressed potential conflicts of interest in his legal representation during a brief hearing in a New York courtroom.

In a hearing at the United States District Court for the Southern District of New York, Mashinsky participated in a Curcio hearing, where the judge questioned him about his legal team. Mashinsky reportedly waived any potential conflicts with attorneys Marc Mukasey and Torrey Young, who are also involved in the criminal case against former FTX CEO Sam Bankman-Fried.

Judge John George Koeltl reminded Mashinsky that while Celsius may claim to be a victim of Alameda Research, documents that may conflict with both cases couldn’t be used. Bankman-Fried’s sentencing is set for March 28, while Mashinsky’s trial is scheduled to begin on September 17.

“This is my first time in court. I am not an expert in this space. I am spending money to prove my innocence. I assume SBF’s sentencing will be completed before my trial. But we cannot know,” said Mashinsky, as reported by Inner City Press.

Both Mashinsky and Bankman-Fried’s cases prompted prosecutors to call for Curcio hearings in February to address concerns about potential conflicts of interest. The U.S. government indicated that Mashinsky partly attributed Celsius’ collapse to actions by FTX’s sister firm, Alameda Research, involving Bankman-Fried.

With Mashinsky resolving any potential conflicts in his case, Bankman-Fried is set to return to court on Feb. 21 for a similar Curcio hearing. Bankman-Fried, who was convicted of seven felony counts in November 2023, has remained relatively out of the public eye, but recently surfaced in photos that offered a glimpse into his life behind bars.

Mashinsky stepped down as Celsius CEO in September 2022. In July 2023, he was indicted on seven counts, including securities fraud, wire fraud, and conspiracy to commit fraud related to his activities at the platform. As of now, he remains free on $40-million bail until his trial.

The SEC lawsuit alleges that Mashinsky and Celsius misled investors about the company’s financial condition and its ability to repay depositors. Additionally, they are accused of selling unregistered securities to investors in the form of crypto interest-bearing accounts (BIAs). The BIAs promised investors high returns, but the SEC said that the bankrupt lender did not have the funds to pay those returns.

In a parallel action, the CFTC filed a complaint, alleging that Mashinsky and Celsius engaged in a “scheme to defraud hundreds of thousands of customers” by mispresenting the safety and profitability of Celsius’s digital asset-based finance platform. The agency also claims that Celsius engaged in market manipulation by artificially inflating the price of CEL.

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