Here’s what happened in crypto today


Courts in the United States have frozen the financial assets of former Celsius CEO Alex Mashinsky. Former FTX CEO Sam Bankman-Fried’s appeal of his bail revocation has been deemed “meritless” by prosecutors in the case against him. Meanwhile, Grayscale told a U.S. securities regulator it has no legal leg to stand on to continue blocking its Bitcoin fund conversion.

Mashinsky’s assets frozen by U.S. court

The saga surrounding Celsius took another turn on Sept. 5 when a U.S. court froze certain bank accounts tied to former CEO Alex Mashinsky.

According to court filings, a New York judge has approved a request to unseal a restraining order related to Mashinsky’s financial and real estate assets. In practice, this means the Department of Justice can freeze certain bank accounts in Mashinsky’s name. The former Celsius CEO’s Texas property, purchased in 2021, was also part of the order.

The house has been on the market for over a year and was listed around the time that Celsius filed for bankruptcy in July 2022.

U.S. authorities arrested Mashinsky in July over allegations of misleading investors and defrauding users. He pleaded not guilty to all charges and was eventually released on a $40 million bail bond. Under the bail conditions, Mashinsky is prohibited from transferring or receiving more than $10,000 without prior approval.

Sam Bankman-Fried appeal against bail revocation “meritless”: Prosecutors

The U.S. Attorney’s Office has filed an affirmation of the denial of bail to former FTX CEO Sam Bankman-Fried, claiming that he could attempt witness tampering and stating that no release conditions would assure the safety of the witnesses. Prosecutors responded to several claims made in his appeal against the bail revocation, calling it “meritless.”

In their response, the prosecutors argued that Bankman-Fried, also known as “SBF,” was found to have twice committed or attempted witness tampering in violation of the court orders. Thus, in light of the continued evasions of his pretrial release conditions, Bankman-Fried was unlikely to abide by the conditions of release.

The first time SBF attempted to contact witnesses came to light in January earlier this year, when the former FTX CEO initiated contact with the then-general counsel of FTX US, who is also a potential trial witness represented by counsel.

The second such instance came in July 2023, when a New York Times report published the private journal messages of Caroline Ellison, former CEO of Alameda and SBF’s associate. SBF’s counsel confirmed that the journal was leaked by the former FTX CEO himself. The prosecutors reached out to the district court to highlight how SBF had covertly provided private and potentially embarrassing writings of Ellison to discredit her and potentially influence the perception of the jury in the case when it goes to trial.

On July 26, during a court conference, prosecutors appealed to revoke SBF’s bail plea based on his violations of the bail conditions and attempts to influence witnesses. Federal Judge Lewis Kaplan from the District Court for the Southern District of New York revoked SBF’s bail on Aug. 11 after the former CEO was found to have contacted witnesses in an attempt to influence or intimidate them. SBF had been out on bail on a $250 million bond since December 2022.

On Aug. 28, SBF’s lawyers appealed the revocation of the bail ruling and claimed that the former FTX CEO was well within his right to talk to the press about Ellison, as it was protected under the First Amendment. However, prosecutors argued that Kaplan took SBF’s First Amendment rights into consideration in the ruling. The judge in the ruling noted that “the law is that once communication is undertaken as part of or with the intent to intimidate or influence a witness, it’s a crime, and the First Amendment has nothing to do with it.” The prosecutors made two key arguments against the SBF appeal. First:

“The District Court did not clearly err in finding probable cause to believe Bankman-Fried twice committed attempted witness tampering while on pretrial release.”


“Judge Kaplan did not clearly err in finding probable cause that Bankman-Fried attempted to tamper with Witness 1.”

The prosecutors also argued that the defendants didn’t argue against or dispute the ruling in SBF’s attempt to contact former FTX US counsel, which the judge found to be a clear attempt at witness tampering.

SEC out of legal options to stop Bitcoin ETF conversion: Grayscale letter

The U.S. Securities and Exchange Commission (SEC) is out of legal reasons to continue stopping the conversion of Grayscale’s flagship Bitcoin (BTC) fund to a spot exchange-traded fund (ETF), the asset manager said.

In a Sept. 5 letter, Grayscale’s lawyers requested a meeting with the SEC to discuss the “way forward” following the regulator’s court loss on Aug. 29 over the conversion of the Grayscale Bitcoin Trust (GBTC).

“The Court of Appeals has spoken, there is no available rationale that would distinguish a Bitcoin futures ETP from a spot Bitcoin ETP under the legal analysis previously adopted by the Commission in rejecting spot Bitcoin ETPs.”

The SEC should conclude there are “no grounds” for treating GBTC differently from Bitcoin futures ETFs, whose filings “the Commission has previously approved,” Grayscale’s letter added.

Excerpt of Grayscale’s letter to the SEC by its retained law firm, Davis Polk. Source: Grayscale

It continued, saying if there was another reason for rejecting GBTC’s conversion besides the Exchange Act’s requirement that rules be “designed to prevent fraudulent and manipulative acts and practices,” it would have already been made clear.

“We are confident that it would have surfaced by now in one of the fifteen Commission orders that rejected spot Bitcoin filings even after Bitcoin futures ETPs began trading.”

“We believe the Trust’s nearly one million investors deserve this fair playing field as quickly as possible,” Grayscale concluded.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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