25 April, 2024

Celsius Lawyer on the Hook for Alleged Fraud Alongside Firm’s CEO

22 Jul, 2023

21 Nov, 2023

  • Celsius’s lawyer Roni Cohen-Pavon is under US scrutiny following alleged support to ex-CEO.
  • Alex Mashinsky, the CEO of Celsius, was arrested and faces massive fraud allegations.
  • Potential recovery of Celsius assets reportedly hinges on Bitcoin; Ethereum surge in price.

Based on a recent Bloomberg report, Roni Cohen-Pavon, the chief revenue officer and lawyer of the now-defunct crypto lender Celsius Network Ltd, has been facing legal scrutiny in the United States for allegedly facilitating fraudulent schemes orchestrated by the company’s ex-CEO, Alex Mashinsky. Cohen-Pavon, an Israeli citizen, had an influential but less public role in the company’s operations, which at its apex held $25 billion in client assets. His arrest now hangs in the balance as US authorities mull over an extradition request.

The indictment charges against Cohen-Pavon and Mashinsky, who was apprehended at his Manhattan penthouse, were announced by the US Attorney’s office in Manhattan on July 13. Mashinsky faces seven counts, including securities fraud, commodities fraud, wire fraud, and conspiracy to manipulate the price of Celsius’ token CEL. The charges stem from alleged actions that resulted in the loss of billions of dollars for Celsius customers during the 2022 crypto market meltdown.

The arrest of Mashinsky and the looming prosecution of Cohen-Pavon follow a series of legal actions against Celsius by the US Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Federal Trade Commission (FTC). The crypto lending platform declared bankruptcy in July 2022, and its assets were subsequently auctioned to a crypto consortium, Fahrenheit.

Mashinsky had labeled the accusations as “baseless” and blamed them on online misinformation. Conversely, New York Attorney General Letitia James sued him in January for allegedly duping investors about the firm’s financial health before its bankruptcy declaration.

Cohen-Pavon, who remained on the company’s payroll even after the bankruptcy filing, is accused of aiding Mashinsky in misleading customers and mismanaging the company’s native token, CEL. The US Attorney’s office alleged that this manipulation directly benefited both executives. It is suggested that Cohen-Pavon made a profit of $3.6 million from the sale of his CEL holdings, while Mashinsky allegedly netted $42 million.

Cohen-Pavon and Mashinsky first crossed paths in 2018 in Singapore, and together, they made Celsius a popular platform for digital asset deposits by offering unusually high-interest rates. The potential fallout from the arrest of Mashinsky and the charges against Cohen-Pavon casts a cloud over the future of Celsius’s customer claims. However, the crypto-centered investment firm, Bank of the Future, estimated that Celsius could settle all claims if the market prices of Bitcoin and Ether, two of the firm’s held assets, were to double.


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