Former Celsius CEO seeks to dismiss FTC suit

The former Celsius Network CEO Alex Mashinsky filed in the Southern District of New York a ходатайство to dismiss the U.S. Federal Trade Commission (FTC) suit against him.

According to his lawyers, the case should be dismissed, because Mashinsky left the post as chief executive officer of the company in September 2022. For this reason the agency’s assertion that the defendant is ‘violating’ or ‘about to violate’ the law is unfounded, the lawyers noted.

The FTC has brought a number of charges against Celsius, Mashinsky, and other co-founders of the crypto-lending platform, including Shlomi Daniel Leon and Hanoh ‘Nook’ Goldstein. The defendants allegedly deceived consumers to attract crypto assets by false promises that their deposits would be secure.

In July, Celsius reached a global settlement with the agency, which provides for a payout of $4.7 billion. The FTC agreed to stay the court’s ruling so that ongoing bankruptcy proceedings could use the funds to satisfy creditor claims.

The co-founders did not settle the agency’s claims. Goldstein also filed a motion to dismiss the suit.

In June 2022, Celsius suspended withdrawals, exchanges and transfers between accounts due to extreme market conditions.

After filing for bankruptcy, Celsius reported a $1.2 billion shortfall in its balance sheet. In August it emerged that the company’s liabilities exceeded its assets by $2.85 billion.

In early 2023, the New York Attorney General accused Mashinsky of defrauding investors by billions of dollars.

In July, U.S. law enforcement arrested the former Celsius CEO, and the DOJ brought seven criminal charges against him. In September, a court ordered Mashinsky’s assets frozen for the duration of the proceedings.

Creditors of Celsius are voting on the sale of the platform’s digital assets to the Fahrenheit consortium. If the deal goes through, they could recover 67-85% of their claims.