Celsius Founder Alex Mashinsky Files to Have 12-Year Crypto Fraud Sentence Vacated

Alex Mashinsky, the founder and former CEO of defunct crypto lending platform Celsius, is seeking to have his 12-year prison sentence lifted according to a new motion submitted in the United States District Court for the Southern District of New York.

The motion to vacate, handwritten by Mashinsky, cited ineffective counsel and “fruit of a poisonous tree” as grounds for revoking the judgment.

Mashinsky, who pleaded guilty to counts of commodities and securities fraud, added additional material to support his claims, noting that his ineffective counsel was due in part to “financial duress resulting in an unavoidable and absolute conflict of interest with the client.”

“The root cause of counsel’s shortcomings lay in the undisclosed financial distress of the firm of Mukasey & Young LLP,” says Mashinsky’s motion for habeas corpus relief. “This exigency created a conflict of interest that permeated every strategic decision made by counsel since the beginning of petitioner’s representation.”

That conflict was the company’s relationship with FTX founder and former CEO Sam Bankman-Fried, better known as SBF. Mashinsky said it created an “inevitable conflict because it was the market manipulation of the CEL token and StETH by SBF” that damaged Celsius, which later interrupted recordingsleaving customers without access to billions in deposits.

Shortly after Celsius stopped recording, that was the case forced to file for bankruptcy in an attempt to stabilize its operations. A year after the chaos surrounding his company, Mashinsky was arrested and hit with a stack of charges from the SEC, CFTC and FTCwhich some claimed that he defrauded customers of $42 million.

He later pleaded guilty, reportedly said in court: “I know what I did was wrong, and I want to try to do everything I can to make it right.”

Although some Creditors wanted even harsher penaltiesMashinsky was sentenced to 12 years in prison for his crimes. Now he wants that verdict overturned.

Last month, Mashinsky was formally banned from the cryptocurrency industry part of a $10 million settlement with the FTC. The regulator initially earned a $4.7 billion judgment against him, although most of the judgment has been stayed, leaving only the $10 million payment required.