Roni Cohen-Pavon, the former chief revenue officer of crypto lending platform Celsius, has pleaded guilty to criminal charges, according to a report from Reuters citing court documents.
The U.S. Department of Justice charged Cohen-Pavon alongside Celsius co-founder and former CEO Alex Mashinsky in July with securities fraud, market manipulation and wire fraud for “illicitly manipulating the price of Celsius’s crypto token.” Mashinsky also faced individual charges of defrauding Celsius customers.
Cohen-Pavon, who is 36 years old, pleaded guilty to four charges, which has a maximum potential sentencing of 65 years, at a hearing on Sep. 14 before U.S. District Judge John Koeltl in Manhattan, New York, the report said.
The U.S. Attorney’s office for the Southern District of New York and Cohen-Pavon’s attorney did not immediately respond to a request for comment. Cohen-Pavon’s sentencing is scheduled for Dec. 11, 2024, according to the Reuters report.
Mashinsky has pleaded not guilty to all charges and was released on bail, secured by a $40 million bond.
The agency accused Mashinsky and Cohen-Pavon of orchestrating a scheme that misled customers and market participants on the price of Celsius’ token CEL. The agency said they often used customer deposits to prop up the price of the token without disclosing this information to customers and alleged that the artificial inflation of the token price enabled Cohen-Pavon and other executives to sell their holdings for “a substantial profit,” with Cohen-Pavon personally reaping at least $3.6 million from his sales of the tokens.
Celsius filed for bankruptcy in July last year as the crypto market entered a deep bear market following the collapse of crypto hedge fund Three Arrows Capital and the Terra ecosystem. A 476-page examiner report in the bankruptcy proceedings showed that Celsius’s problems started as early as 2020 and that the firm was using customer funds to prop up the price of its token CEL. This strategy was referred to as “the OTC flywheel.”
Mashinsky and his company Celsius are also facing separate actions from the U.S. Securities and Exchange Commission (SEC), the Commodities Futures Trading Commission (CFTC) and the Federal Trade Commission (FTC). Allegations in the lawsuits included fraud and the sale of unregistered securities, as well as other charges.
The Department of Justice’s case against Mashinsky is one of several cases underway against crypto executives. Crypto exchange FTX founder Sam Bankman-Fried will go to trial on Oct. 3 facing charges related to securities fraud, wire fraud and conspiracy to commit money laundering, among others. Bankman-Fried has also pleaded not guilty to all charges.