The United States government has called for a hearing to address potential conflicts of interest in the criminal cases of former FTX CEO Sam “SBF” Bankman-Fried and former Celsius CEO Alex Mashinsky , both under indictment for fraud.

In similar letters addressed to the respective judges overseeing SBF’s and Mashinsky’s cases on Feb. 6, prosecutors raised concerns about lawyers Marc Mukasey and Torrey Young, who have both filed notice of appearances in the criminal cases against the former crypto CEOs. The U.S. government called for a Curcio hearing, in which the judges may ask questions about a potential conflict of interest and why both lawyers were involved in SBF’s and Mashinsky’s cases.

“As the trial evidence in this matter established, Celsius lent money to Alameda Research, and certain loans were repaid by Alameda Research to Celsius using customer funds,” said the letters. “The relationship between Alameda Research and Celsius creates the potential for conflicts in several respects.”

Prosecutors added:

“Bankman-Fried may wish to argue at sentencing or in the event of an appeal that Celsius and similar lenders were not defrauded and are not entitled to restitution. Celsius, and potentially Mashinsky, may take a contrary position.”
Prosecutors call for hearing over lawyers representing Sam Bankman-Fried and Alex Mashinsky image 0 Source: Courtlistener

The U.S. government pointed out that Mashinsky had partially blamed Celsius’s collapse on FTX’s sister firm, Alameda Research, possibly due to SBF’s actions. However, prosecutors argued that the judges could waive the potential conflicts of interest as they were “not so ‘severe.’” Bankman-Fried and Mashinsky could be questioned on whether they wish to waive their rights to “conflict-free representation.”

“[W]hile Mashinsky’s allegations could possibly aid in his own defense, in Bankman-Fried’s case Bankman-Fried’s alleged manipulation of CEL could be additional relevant conduct that the Court could consider at Bankman-Fried’s sentencing,” said the letter.

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Bankman-Fried was indicted in 2022 after the collapse of FTX, extradited from the Bahamas to the United States, and held under house arrest before being remanded to jail for allegedly intimidating a witness. His first criminal trial started in October 2023 and lasted several weeks before a jury convicted the former FTX CEO of seven felony counts related to fraud.

Reports have suggested SBF may not face a second trial — the indictment was divided between seven and five counts for trials in October 2023 and March 2024 — given his previous conviction. He is scheduled to be sentenced on March 28.

Mashinsky was indicted on seven felony counts in July 2023, including securities fraud, wire fraud and conspiracy to commit fraud related to his activities at Celsius. He resigned as the firm’s CEO in September 2022. At the time of publication, Mashinsky remains free on $40 million bail until his trial, scheduled for Sept. 17.

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