Former Celsius CEO Alex Mashinsky has asked the court to permit testimony from six former employees of the crypto firm as he faces the possibility of over 100 years in prison.
Mashinsky was arrested last year on charges of defrauding customers and misleading them about Celsius’ profitability.
Mashinsky’s lawyers asked a New York district court to allow testimony from witnesses, including the firm’s former chief financial officer and chief revenue officer. Many of these witnesses reside outside the U.S., according to the filing.
Mashinsky’s defense claims that he did not intend to harm anyone, arguing that he relied on information provided by the experienced team around him. “The stakes are high,” the lawyers noted, adding that the government has indicated a potential sentence of 115 years under current guidelines.
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.
Among the proposed witnesses is former Celsius Chief Revenue Officer Roni Cohen-Pavon, who reportedly pleaded guilty to his criminal charges last year. Mashinsky’s lawyers claim that Cohen-Pavon and other employees ignored Mashinsky’s instructions to sell CEL tokens, instead buying more tokens without his knowledge.
Prosecutors allege that Mashinsky and Cohen-Pavon manipulated the price of CEL by spending millions to buy the tokens, artificially inflating their value before selling for profit. Mashinsky’s lawyers argue that Cohen-Pavon is a critical witness regarding the manipulation charges, stating he provided legal advice on the company’s purchase and sale of CEL tokens from 2019 to 2022.
Mashinsky’s defense also claims that during his “Ask Mashinsky Anything” live events, where he updated customers on Celsius’s status, any inaccuracies in his statements were supposed to be corrected by the firm’s legal, risk, and regulation teams. However, the lawyers claim that corrections were “almost always made behind Mr. Mashinsky’s back,” suggesting he acted in good faith, not fraudulently.
The court is expected to decide whether to allow the testimonies from the former Celsius employees as part of Mashinsky’s defense strategy.
The SEC lawsuit also 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.
