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In a recent court filing on Monday, the co-founder and former CEO of Celsius, a bankrupt crypto lending platform, Alex Mashinsky, requested the court to have the Federal Trade Commission (FTC) dismiss the charges against him. The legal action comes after Celsius faced financial hurdles last year during the downturn in the crypto market. Mashinsky was arrested in July as part of a coordinated effort by the Department of Justice (DOJ), Commodity Trading Commission (CFTC), and Federal Trade Commission (FTC).
Mashinsky’s Recent Memorandum
In the Monday filing, the former Celsius Network’s lawyers said that FTC’s claims against him should be dismissed. The FTC’s claims under the Federal Trade Commission Act (FTCA) and the Gramm-Leach-Biley Act (GLBA) should be dismissed as they do not allege specific violations of the rules and laws associated with these acts, the filing showed.
Additionally, the lawyers argued that the FTC cannot seek monetary damages from the defendant under the FTCA, citing a recent court decision of AMG Capital Mgmt., LLC V. FTC. Meanwhile, Mashinsky’s lawyers also stated in the filing that, as mandated by the 1999 GLBA Act, the accusations fail to establish that the defendant knowingly made false statements with the intent to fraudulently acquire customer information from a financial institution.
In Mashinsky’s case, the complaint fails to provide credible evidence supporting the claim that Mashinsky is presently violating or on the verge of violating the law, the filing showed. This is because the former CEO of Celsius Network officially resigned from his role on September 27, 2022.
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What’s Next?
Having previously entered a not-guilty plea to charges of fraud and price manipulation of the CEL token, which his legal team deemed “baseless,” Mashinsky’s lawyers now assert that the court should also reject the FTC’s allegations of investor deception.
Both Mashinsky and his former Chief Technology Officer, Hanoch “Nuke” Goldstein, contended that the FTC should establish clearer regulations before pursuing cases involving novel issues like marketing fraud.
Meanwhile, Goldstein, in a separate submission, asserted that he was unfairly implicated due to his association with other Celsius executives, primarily based on his retweet of a Celsius blog. The FTC’s case against Goldstein relies solely on guilt-by-association claims lacking substance, his filing showed.
Goldstein faces severe accusations of involvement in a cryptocurrency fraud scheme. However, the FTC doesn’t provide concrete evidence of Goldstein’s direct, knowing involvement in these actions, his lawyers argued.
Meanwhile, U.S. Attorney Damian Williams requested the court to temporarily suspend FTC proceedings to prevent potential prejudice to the concurrent criminal case.
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