In the sweltering dawn of a bustling New York morning, the FBI orchestrated a gripping spectacle, apprehending none other than the former Chief Executive Officer of the Celsius Network, Alex Mashinsky. This larger-than-life executive was taken into custody at his opulent penthouse, nested in the heart of Manhattan’s captivating Upper East Side. Fans of true crime dramas won’t be disappointed as Mashinsky’s arrest marked a pivotal moment in a complex web of deceit and fraud.
Arraigned in court a few hours later, Mashinsky vehemently pleaded not guilty to the multitude of charges outlined in the indictment. This colorful tale of betrayal and financial ruin unraveled against the backdrop of Celsius’ catastrophic downfall, leaving countless customers bereft of billions amidst the tumultuous crypto market crash of 2022. Interestingly, this modern-day tragedy had another central figure, the elusive Roni Cohen-Pavon, chief revenue officer and trusted legal advisor of Celsius. However, Cohen-Pavon was conspicuously absent from the courthouse during the initial hearing.
The accused Israeli citizen is suspected of playing a pivotal role in Mashinsky’s alleged misdeeds, orchestrating schemes that manipulated Celsius’ native token, CEL. These manipulations painted an extravagantly false picture for customers, lining the pockets of the very executives who were entrusted with their financial well-being. Cohen-Pavon, operating from the shadows in his home country of Israel, might continue to evade the U.S. authorities unless extradition proceedings are initiated.
What separates Cohen-Pavon from other insiders embroiled in this scandal is that he remained on the payroll even after the company filed for bankruptcy. Astonishingly, court documents revealed that he was set to receive a substantial sum, up to $239,000, for his involvement in the company’s restructuring efforts. However, the momentum drastically shifted after the U.S. Attorney’s Office in Manhattan unveiled charges against both him and Mashinsky on that fateful July 13th. During a bankruptcy hearing just days after the arrests, Celsius attorney Christopher S. Koenig swiftly announced Cohen-Pavon’s imminent termination.
As the courtroom drama unfolds, Cohen-Pavon’s attorney, Jeffrey Brown, and Mashinsky’s legal team opted not to provide statements or respond to inquiries. Attempts to reach Cohen-Pavon directly via Signal messaging went unanswered, adding an air of mystery to this already captivating saga.
The enigmatic collision between Mashinsky and Cohen-Pavon transpired during a chance encounter orchestrated by a partner from Cohen-Pavon’s law firm in a Singapore hotel lobby back in 2018. Mashinsky, instrumental in establishing Celsius in the same year, sought Cohen-Pavon’s legal expertise. According to Mashinsky, Cohen-Pavon was the trusted custodian of Celsius’ legal affairs and a secret to the crypto lender’s unparalleled success, as disclosed in a revealing YouTube video from July 2020.
Tragically, the allure and promises held by Celsius proved too good to be true, as authorities later alleged. The indictment shed light on how these dubious practices directly enriched both Mashinsky and Cohen-Pavon. The former purportedly pocketed a staggering $42 million, while the latter walked away with a cool $3.6 million from selling his CEL holdings.
Cohen-Pavon’s involvement with Celsius predates his time at Herzog, Fox, and Ne’eman, a prestigious Israeli law firm founded fifty years ago. In the pivotal YouTube discussion, Cohen-Pavon explained his initial skepticism towards Mashinsky and Leon, the co-founders of Celsius. However, a face-to-face meeting allowed him to ascertain their sincerity and the genuine nature of their enterprise.
Alas, the supposedly fateful year of 2020 witnessed another twist of fate for Celsius. Cohen-Pavon found himself entwined in a doomed deal with the decentralized finance app KeyFi, causing further financial turmoil for the beleaguered company. Sources within Celsius divulged that the deal was pushed forward against the objections of their CFO, further complicating the tangled web of deceit.
Notorious for his embellishments and grandiose claims, Mashinsky employed his weekly Q&A sessions to manipulate the truth and feed customers a reality far rosier than the actual situation. For instance, he inaccurately touted the success of Celsius’ initial coin offering, asserting that $50 million was raised and all CEL tokens were sold. Prosecutors, however, revealed that only $32 million was raised, leaving a significant chunk of tokens unsold.
The indictment illuminates questionable practices perpetuated by Mashinsky himself, who discovered a substantial discrepancy in Celsius’ balance sheet in early 2021—partly stemming from utilizing customer deposits to purchase CEL. Claiming ignorance, Mashinsky silently confronted this financial predicament, handpicking Cohen-Pavon to oversee a frantic buying spree of CEL on the open market. Though publicly touted as measures to fulfill customer rewards, prosecutors argue that Celsius artificially inflated the price of CEL by forcefully buying above market levels.
A chilling October 2021 WhatsApp message quoted in the indictment exposes Cohen-Pavon’s awareness of the devious manipulation: “The main problem was that the value was fake and was based on us spending millions (~8M a week and even more until February 2020) just to keep it where it is.” This damning revelation paints a clearer picture of the collusion that led to the eventual implosion of Celsius.
In the tumultuous aftermath, Cohen-Pavon assumed the role of Celsius’ interim Chief Financial Officer in 2022, joining a long list of individuals who briefly held the position during the company’s turbulent journey. The captivating narrative reaches new heights as this high-stakes drama continues to unfold, leaving a trail of deceived investors and shattered dreams in its wake.