U.S. Authorities Probe Potential Conflicts in Fraud Cases Against Ex-FTX and Celsius CEOs
Summary:
The U.S. government has requested a hearing to examine possible conflict-of-interest issues arising in the fraud cases against former FTX and Celsius CEOs, Sam Bankman-Fried and Alex Mashinsky. The trial evidence reveals potential conflicts, as Celsius loaned money to Alameda Research, and some loans were reimbursed using customer funds. The government contends such conflicts aren't 'severe' and thus, could be waived by judges. Further details reveal Bankman-Fried and Mashinsky's prior indictment history, criminal charges, and upcoming court dates.
U.S. authorities have summoned a hearing to discuss possible conflict of interest issues emerging in the fraud-related indictments of ex-CEOs of FTX, Sam “SBF” Bankman-Fried, and Celsius, Alex Mashinsky. On February 6, similar letters were sent to the judges handling both cases, highlighting concerns regarding attorneys Marc Mukasey and Torrey Young, both of whom are representing the former crypto business heads. The government has demanded a Curcio hearing where the judges can inquire about conflict of interest concerns and the involvement of these attorneys in the cases.
Evidence presented at the trial shows that Celsius provided loans to Alameda Research, and some of these loans were repaid to Celsius using customer funds, which the letters point out could lead to potential conflicts. Adding that Bankman-Fried might want to claim at sentencing or in case of an appeal that Celsius and similar lenders were not victims of fraud and are therefore not entitled to compensation. A position that may be countered by Celsius and perhaps Mashinsky.
Courtlistener comes as a source to report that Mashinsky had partly attributed the failure of Celsius to FTX’s affiliate company, Alameda Research, possibly as a result of SBF’s actions. Although, the prosecutors opined that these conflicts of interest are not 'so severe' and suggested that the judges could wave them off, in which case both accused might be asked if they wish to forgo their rights to "conflict-free representation."
The government noted that even though Mashinsky's claims might help in his defense, in Bankman-Fried's scenario, his alleged CEL manipulation could become a contributing aspect that the court might consider during his sentencing.
For the unversed, Bankman-Fried was indicted in 2022 post-FTX's downfall and was extradited from the Bahamas to America, kept under house arrest, and later sent to jail allegedly for intimidating a witness. His initial criminal trial commenced in October 2023 and stretched for several weeks until a jury convicted him on seven fraud-related felony charges. It has been suggested that SBF might not face a second trial—his indictment was bifurcated between seven and five counts for the trials in October 2023 and March 2024—because of his prior conviction. His sentencing is due on March 28.
Meanwhile, Mashinsky was slapped with seven felony charges in July 2023, encompassing securities fraud, wire fraud, and conspiracy to defraud, all linked to his dealings at Celsius. He resigned from his CEO post in September 2022 and currently remains out on a $40 million bail pending his trial, which is set for Sept. 17. A magazine reported that U.S. law enforcement agencies are tightening their grip on criminal activities related to cryptocurrency.
Published At
2/7/2024 7:29:30 PM
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