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Alex Mashinsky, the ex-CEO of the collapsed crypto lender Celsius Network, will be released on bail after he was arrested and charged with fraud on Thursday.
Per court documents, Mashinsky has agreed to a $40 million personal recognizance bond, which has to be signed by his wife by Friday, July 14, and by another, yet to be identified financially responsible person before July 21.
Under the deal, Mashinsky is required to hand his travel documents to authorities, with his travels restricted to New York. Additionally, the crypto lender’s former CEO is barred from opening “any new financial, business, or personal bank accounts, lines of credit, or cryptocurrency accounts, without the approval of Pretrial Services,” reads the document.
A personal recognizance bond is a type of bail agreement that allows the defendant to be released from custody without having to pay any bail money. Instead, they are released on their own personal recognizance, based on their promise to appear in court for all required hearings and proceedings related to their case.
Recognizance bonds are typically granted to individuals who are considered to be low-flight risks and have strong ties to the community. Factors such as the defendant's criminal history, employment status, and family obligations may be considered in determining whether a recognizance bond is appropriate.
However, if the defendant fails to appear in court as required, they may face additional charges and forfeit any bail or bond amount that would have been required.
In Mashinky’s case, the bond is also secured by a financial claim on his New York City residency and a bank account.
Mashinsky denies accusations
The U.S. Department of Justice arrested Mashinsky, 57, on Thursday, filing seven criminal charges against the entrepreneur, including securities fraud, wire fraud, and commodities fraud.
Mashinsky and Roni Cohen-Pavon, Celsius’ chief revenue officer, were also charged with manipulating the price of the platform’s native crypto token, CEL, with Michael A. Brodack, special agent in charge of the Criminal Division of the New York Field Office, saying at a press conference on Thursday that by allegedly pocketing the returns Mashinsky earned more than $40 million.
The former Celsius CEO, however, pleaded not guilty to charges, according to the court document.
“He looks forward to vigorously defending himself in court against these baseless charges,” Mashinsky’s lawyer Jonathan Ohring said in a statement cited by Bloomberg Law.
Decrypt has reached out to Yankwitt LLP, the New York-based trial and litigation firm representing Mashinsky, and will update the story should we hear back.
The U.S. Securities and Exchange Commission (SEC) also filed a lawsuit against Mashinsky and Celsius, alleging that he and his New Jersey-based company raised billions of dollars by selling unregistered cryptocurrency securities. The SEC further accuses them of deceiving investors regarding the financial condition of the privately held firm.
In separate lawsuits the Federal Trade Commission (FTC) alleged that Celsius “duped consumers” who knew little about cryptocurrencies to deposit their assets and then “squandered” their investments, while the Commodity Futures Trading Commission (CFTC) charged Mashinsky and Celsius with fraud and material misrepresentations in connection with the operation of the crypto lending platform platform.
All three agencies filed their lawsuits on Thursday too, a year after Celsius Network filed for bankruptcy.