In the courts, Celsius founder Alex Mashinsky has been sentenced to twelve years in prison for the Celsius fraud, which resulted in customers losing over half a billion dollars.
![Alex Mashinsky has been sentenced to twelve years in prison for his Celsius fraud, which culminated in the mid-2022 collapse of the US-based cryptocurrency lending firm, causing over half a billion dollars in customer losses [I82, 71]. The government had requested a 20-year sentence; Mashinsky asked for just a single year of imprisonment. Mashinsky pleaded guilty to fraud in December, just before his case was set to go to trial, and that plea was a major factor in his receiving a substantially shorter sentence than Sam Bankman-Fried’s 25 years.
Photo of Alex Mashinsky on stage, wearing a shirt with the Celsius logo and the slogan “Banks are not your friends”. CC BY 2.0, WebSummit, https://flic.kr/p/2mGvJLc](/proxy/post_attachment/496779/0719eef7cb.png "Alex Mashinsky has been sentenced to twelve years in prison for his Celsius fraud, which culminated in the mid-2022 collapse of the US-based cryptocurrency lending firm, causing over half a billion dollars in customer losses [I82, 71]. The government had requested a 20-year sentence; Mashinsky asked for just a single year of imprisonment. Mashinsky pleaded guilty to fraud in December, just before his case was set to go to trial, and that plea was a major factor in his receiving a substantially shorter sentence than Sam Bankman-Fried’s 25 years.
Photo of Alex Mashinsky on stage, wearing a shirt with the Celsius logo and the slogan “Banks are not your friends”. CC BY 2.0, WebSummit, https://flic.kr/p/2mGvJLc")
Edited 33d ago
![Avi Eisenberg has been sentenced to four years and four months in prison for possession of child sexual abuse material, a crime that was discovered during a law enforcement search of his devices while investigating his $110 million exploit of the Mango Markets cryptocurrency platform [W3IGG, I6, 43, 55, 56, 67, 81]. The judge declined to impose a sentence for the crypto crime, citing the defense’s request for an acquittal or retrial, but noted that the majority of Eisenberg’s sentence would likely stem from the CSAM conviction regardless.21](/proxy/post_attachment/496780/24a75d966e.png "Avi Eisenberg has been sentenced to four years and four months in prison for possession of child sexual abuse material, a crime that was discovered during a law enforcement search of his devices while investigating his $110 million exploit of the Mango Markets cryptocurrency platform [W3IGG, I6, 43, 55, 56, 67, 81]. The judge declined to impose a sentence for the crypto crime, citing the defense’s request for an acquittal or retrial, but noted that the majority of Eisenberg’s sentence would likely stem from the CSAM conviction regardless.21")
Also, the trial has begun against SafeMoon CEO John Karony, the thief suspected to have exploited Nomad bridge has been arrested, and Shaq has settled with FTX customers.
![The criminal trial against former SafeMoon CEO John Karony has begun in the Eastern District of New York, with prosecutors already launching into key testimony from cooperating witness and former SafeMoon CTO, Thomas “Papa” Smith. Smith was the second of three executives charged in November 2023 with conspiracy to commit securities fraud, wire fraud, and money laundering, and he pleaded guilty. The third executive, Kyle Nagy, is still in the wind. Karony argues that because SafeMoon investors could theoretically have traced public blockchain transactions to observe that he and others were draining money from the liquidity pools, it wasn’t fraud (despite their representations that the pool was locked). For detailed coverage, David Z. Morris is there in person covering the trial for Protos, his Dark Markets newsletter, and on social media.
Alexander Gurevich, accused of crafting the August 2022 exploit that enabled a $190 million theft from the Nomad bridge [W3IGG], has been arrested in Israel and is in the process of being extradited to the United States. Although Gurevich was the first to identify the vulnerability, he’s only accused of stealing about $3 million; the remaining amount was stolen in a mad scramble of copycats replicating his exploit. He was reportedly arrested at the Tel Aviv airport en route to Russia, where he has dual citizenship, and was attempting to travel under a different identity after changing his name the prior week.22](/proxy/post_attachment/496781/91da0e33cd.png "The criminal trial against former SafeMoon CEO John Karony has begun in the Eastern District of New York, with prosecutors already launching into key testimony from cooperating witness and former SafeMoon CTO, Thomas “Papa” Smith. Smith was the second of three executives charged in November 2023 with conspiracy to commit securities fraud, wire fraud, and money laundering, and he pleaded guilty. The third executive, Kyle Nagy, is still in the wind. Karony argues that because SafeMoon investors could theoretically have traced public blockchain transactions to observe that he and others were draining money from the liquidity pools, it wasn’t fraud (despite their representations that the pool was locked). For detailed coverage, David Z. Morris is there in person covering the trial for Protos, his Dark Markets newsletter, and on social media.
Alexander Gurevich, accused of crafting the August 2022 exploit that enabled a $190 million theft from the Nomad bridge [W3IGG], has been arrested in Israel and is in the process of being extradited to the United States. Although Gurevich was the first to identify the vulnerability, he’s only accused of stealing about $3 million; the remaining amount was stolen in a mad scramble of copycats replicating his exploit. He was reportedly arrested at the Tel Aviv airport en route to Russia, where he has dual citizenship, and was attempting to travel under a different identity after changing his name the prior week.22")
The Samourai Wallet case is on hold while the government decides whether to dismiss the criminal case based on Deputy Attorney General Todd Blanche’s instructions to deprioritize enforcement of crypto crime. They’re charged with operating an unlicensed money transmitting business and money laundering conspiracy.
Samourai defendants have also accused prosecutors of withholding evidence that FinCEN representatives didn’t believe Samourai was a MSB, and have requested a hearing about a potential Brady violation. Prosecutors argue this was not an official position by FinCEN, and that the evidence was disclosed in a sufficiently timely fashion.
![After the joint request, the defense also submitted a letter accusing prosecutors of improperly suppressing evidence that “senior representatives” at FinCEN believed Samourai Wallet didn’t function as a money services business. “It’s hard to imagine a clearer example of ‘regulation by prosecution’ than what we have here: The relevant regulator telling the prosecutors that Samourai Wallet was not a money transmitter — under the same public guidance that Mr. Rodriguez and Mr. Hill relied on to guide their conduct — and the prosecutors going ahead and indicting them for operating an unlicensed money services business anyway,” wrote the defense team. They have asked the judge to hold a hearing regarding the late disclosure, which they argue was a Brady violation that could have influenced the Magistrate Judge’s bail determinations and Judge Berman’s decision not to allow the defendants to file a motion to dismiss immediately after their arraignment.27
The government replied to characterize the call described in the disclosure as merely “FinCEN employees express[ing] their individual, informal, and caveated opinion”, writing that “the individual employees of FinCEN were not speaking on behalf of FinCEN, they were not providing FinCEN’s opinion, and they ‘did not have a sense of what FinCen would decide if this question were presented to their FinCen policy committee.’” Prosecutors also argue the evidence was provided in a sufficiently timely fashion for the defense team to use in](/proxy/post_attachment/496785/5c5f66e32a.png "After the joint request, the defense also submitted a letter accusing prosecutors of improperly suppressing evidence that “senior representatives” at FinCEN believed Samourai Wallet didn’t function as a money services business. “It’s hard to imagine a clearer example of ‘regulation by prosecution’ than what we have here: The relevant regulator telling the prosecutors that Samourai Wallet was not a money transmitter — under the same public guidance that Mr. Rodriguez and Mr. Hill relied on to guide their conduct — and the prosecutors going ahead and indicting them for operating an unlicensed money services business anyway,” wrote the defense team. They have asked the judge to hold a hearing regarding the late disclosure, which they argue was a Brady violation that could have influenced the Magistrate Judge’s bail determinations and Judge Berman’s decision not to allow the defendants to file a motion to dismiss immediately after their arraignment.27
The government replied to characterize the call described in the disclosure as merely “FinCEN employees express[ing] their individual, informal, and caveated opinion”, writing that “the individual employees of FinCEN were not speaking on behalf of FinCEN, they were not providing FinCEN’s opinion, and they ‘did not have a sense of what FinCen would decide if this question were presented to their FinCen policy committee.’” Prosecutors also argue the evidence was provided in a sufficiently timely fashion for the defense team to use in")
![Samourai Wallet
Prosecutors who filed charges a year ago against the operators of Samourai Wallet [I56, 57, 67] have joined the defense in requesting a pause in the case “while the Government determines its position” on a request to dismiss the case based on Deputy Attorney General Todd Blanche’s “Memorandum on Ending Regulation by Prosecution” [I81].24 The memo directed the Justice Department “not [to] charge regulatory violations in cases involving digital assets … unless there is evidence that the defendant knew of the licensing or registration requirement at issue and violated such a requirement willfully”.25 The Samourai Wallet defendants are charged with conspiracy to operate an unlicensed money transmitting business — one of the violations Blanche instructed prosecutors not to charge — but also with money laundering conspiracy.26](/proxy/post_attachment/496784/c415e8f677.png "Samourai Wallet
Prosecutors who filed charges a year ago against the operators of Samourai Wallet [I56, 57, 67] have joined the defense in requesting a pause in the case “while the Government determines its position” on a request to dismiss the case based on Deputy Attorney General Todd Blanche’s “Memorandum on Ending Regulation by Prosecution” [I81].24 The memo directed the Justice Department “not [to] charge regulatory violations in cases involving digital assets … unless there is evidence that the defendant knew of the licensing or registration requirement at issue and violated such a requirement willfully”.25 The Samourai Wallet defendants are charged with conspiracy to operate an unlicensed money transmitting business — one of the violations Blanche instructed prosecutors not to charge — but also with money laundering conspiracy.26")
All this and more in the latest issue of Citation Needed. And don’t forget there’s an audio version available on the page or in your favorite podcasting platform, if that’s your preference: https://pod.link/1719025552