Summary
- Alex Mashinsky, founder of the failed crypto lending service Celsius, has filed a motion to overturn his 12-year prison sentence.
- He claims ineffective legal representation as a primary reason for his appeal.
- Mashinsky was apprehended and subsequently pled guilty to charges of commodities and securities fraud.
Alex Mashinsky, the creator and former CEO of the now-defunct cryptocurrency lending platform Celsius, has submitted a request to the District Court for the Southern District of New York to vacate his 12-year prison sentence as detailed in a recent motion.
In his handwritten motion, Mashinsky cites ineffective counsel and the principle of “fruit of a poisonous tree” as the basis for his request to have the sentence annulled.
After pleading guilty to charges related to commodities and securities fraud, Mashinsky included supporting documents in his filing, arguing that his legal representation was compromised by “financial duress resulting in unavoidable and absolute conflict of interest with client.”
According to his motion for habeas corpus relief, “The core issue with counsel’s performance stemmed from the undisclosed financial troubles of the firm Mukasey & Young LLP.” Mashinsky asserts that these financial issues led to a conflict of interest affecting every strategic choice made by his attorneys from the beginning of his representation.
This conflict was linked to the firm’s connection with Sam Bankman-Fried, the founder and former CEO of FTX. Mashinsky claims this engagement created an “unwaivable conflict since it involved market manipulation of the CEL token and StETH by SBF,” which adversely affected Celsius, leading the company to halt withdrawals and leaving customers unable to access billions in their deposits.
Following the suspension of withdrawals, Celsius filed for bankruptcy to stabilize its operations. A year later, amidst the fallout from his company, Mashinsky was arrested and faced numerous charges from the SEC, CFTC, and FTC, including allegations that he defrauded customers of $42 million.
He later admitted guilt in court, reportedly stating, “I know what I did was wrong, and I want to try to do whatever I can to make it right.”
Despite some creditors seeking more severe penalties, Mashinsky received a 12-year prison sentence for his offenses in court. He is now attempting to have that sentence overturned.
Last month, Mashinsky was officially prohibited from participating in the cryptocurrency sector as part of a $10 million settlement with the FTC, which initially secured a $4.7 billion judgment against him, though most of it has been suspended, requiring only the $10 million payment.