Is There A Link Between FTX And Celsius Network? Prosecutors Probe Founders’ Lawyers

United States Prosecutors have called for a comprehensive examination of the cases involving former Chief Executive Officer (CEO) of Celsius, Alex Mashinsky, and FTX founder and former CEO, Sam Bankman-Fried. The call is based on concerns about potential conflicts of interest arising from the shared use of legal representation by both crypto companies. 

US Prosecutors Address Potential Conflict Of Interest

On Tuesday, the US government requested a hearing from Judge Lewis Kaplan, the Senior Judge of the Southern District of NewYork. The Prosecutors filed letters urging the Court to conduct a hearing concerning the potential conflicts of interest that could arise from the defense counsel’s representation of the defendant. 

The letter raised concerns over lawyers Marc Mukasey and Torrey Young, who had previously filed notices of appearances in criminal cases against the former CEOs of FTX and Celsius. Now, the lawyers are set to represent Mashinsky as a defendant, prompting issues of a potential conflict of interest that may compromise the integrity of the legal proceedings.

Consequently, US prosecutors have demanded a Curcio hearing to address these issues, allowing the defendant to knowingly waive any potential conflict that may arise. According to US laws, a defendant has a right to conflict-free legal representations. 

Typically, when a Court becomes aware of the possibility of a conflict of interest, it initiates a thorough investigation to determine whether the attorney indeed suffers a conflict. Furthermore, upon confirmation that the defense counsel is compromised by a conflict of interest, the Court has a disqualification obligation to ascertain whether the severity of the conflict justifies the dismissal of the attorney. 

Presently, the Prosecutors have noted that the potential conflicts are not so “severe” and can be easily resolved by waiving them or by appointing additional counsel to the case. 

Celsius Allegations Fuel Possible Conflict Of Interest With FTX

According to the US Prosecutors’ letter, the recognition of Celsius’s status as a victim in the fraud involving FTX’s subsidiary company, Alameda Research, may create a conflict in the simultaneous legal representation of both Bankman-Fried and Mashinsky. 

Previously, Mashinsky claimed that Alameda Research used “secret abilities” to borrow unlimited funds for Celsius’s native token, CEL, on FTX, subsequently flooding the market and manipulating the token’s price. Due to this, US Prosecutors assert that these allegations establish grounds for a conflict of interest. 

Additionally, the defense counsel’s limitation in sharing information discovered from the millions of Bankman-Fried records, courtesy of a protective order, may give rise to a potential for a conflict of interest between the two former crypto CEOs. As a result, the US government has conveniently presented a set of proposed questions for the Court to ask the defendant as part of the Curcio inquiry.