Former Celsius CEO Alex Mashinsky is preparing for a criminal trial scheduled for September 17, 2024. The trial follows allegations of defrauding customers and misleading them about the financial state of the crypto lending firm. Mashinsky’s legal troubles come as Celsius declared bankruptcy and owes significant amounts to its investors.

Prosecutors have accused Mashinsky and Celsius of inflating the price of the company’s native token using customer funds and repeatedly deceiving clients. Additionally, the chief revenue officer at Celsius, Roni Cohen-Pavon, has also faced criminal charges and reportedly entered a guilty plea recently.

The Securities and Exchange Commission (SEC) has filed a lawsuit against Celsius and its former CEO, alleging deceitful and unregistered sales of “crypto-asset securities.”

The SEC further accuses Mashinsky and Celsius of providing false information to investors about the company’s financial situation and manipulating the price of CEL, the firm’s signature token. In addition to the SEC charges, the Commodity Futures Trading Commission (CFTC) has brought its own fraud allegations against Mashinsky and Celsius. As a result, Mashinsky’s assets, including his Texas home and funds held at institutions like Goldman Sachs, Merrill Lynch, and SoFi Bank, have been frozen.

Despite the ongoing legal battles, there is some hope for Celsius creditors. They have recently approved a reorganization plan that ensures they will receive payments in prominent cryptocurrencies such as Bitcoin and Ethereum. Additionally, they will be given equity in a new corporate entity called “NewCo.”

However, this plan has faced criticism, with some creditors expressing concerns about accepting shares in an unfamiliar venture. There have also been demands for the return of CEL tokens, Celsius’s native cryptocurrency.

The upcoming trial and legal challenges faced by Alex Mashinsky and Celsius have cast a shadow over the company’s operations. The allegations of fraud and deception have raised questions about the credibility and financial stability of the crypto lending firm. As the legal proceedings unfold, the outcome of the trial and the reorganization plan will have significant implications for both Celsius and its creditors.