Alexander Mashinsky is continuing his push to overturn his conviction. According to his latest motion filed in the U.S. District Court for the Southern District of New York, he argues that creditor recovery in Celsius's bankruptcy liquidation has significantly improved, and that the SEC's earlier withdrawal of a case related to Gemini Earn demonstrates the unequal enforcement treatment of similar crypto lending businesses.
The motion focuses on creditor recovery.
The document first emphasizes the scale of the recovery in the Celsius bankruptcy case. Mashinsky mentions that Celsius' counterparty, EFH, reached a $500 million settlement, which changed external assessments of the extent of the company's losses from its collapse.
According to the motion, with this additional recovery included, Celsius creditors are expected to receive a total of approximately $5.5 billion in distributions later this year. Mashinsky further stated that this figure is at least 20% higher than the total net effective claims listed in the Chapter 11 proceedings.
Gemini Earn becomes the focus of comparison
Mashinsky also cited the SEC's recent dismissal of the Gemini Earn case as a key argument. Gemini Earn, also a crypto lending product, had previously suspended withdrawals during the 2022 market crisis.
The motion stated that Gemini Earn and Celsius had "similar" business models, and users experienced years of waiting after their withdrawals were frozen before gradually recovering their assets. However, in the end, Gemini executives did not face criminal prosecution, and the matter primarily remained at the level of civil penalties by the SEC.
The charges in the two cases differ.
However, from the prosecutor's perspective, Celsius and Gemini Earn are not entirely equivalent. The report mentions that the SEC charges against Gemini Earn focus on the issue of unregistered securities in its lending product.
The core of the Celsius case, however, revolves more around allegations of fraud. This is one of the most crucial legal differences between the two cases. The SEC later agreed to dismiss the Gemini Earn case because users had received full compensation through the Genesis bankruptcy proceedings.
Overturning a conviction remains difficult.
Procedurally, habeas corpus challenges following criminal convictions are inherently difficult to succeed, especially when the defendant has pleaded guilty. Mashinsky's current application primarily seeks to supplement his previously filed habeas corpus application, continuing his efforts to reconsider the conviction and sentencing.
However, this new motion once again brings to the forefront the issue of enforcement standards following the 2022 crypto lending platform crisis. The debate within the crypto industry continues regarding why different platforms face varying regulatory and criminal consequences.
