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Alex Mashinsky, founder and former CEO of bankrupt cryptocurrency lender Celsius Network, pleaded not guilty yesterday to U.S. fraud charges that he misled customers and artificially inflated the value of his company's propriety crypto token, Reuters reported. Three federal regulatory agencies also sued Mashinsky and Celsius in connection with the case. Mashinsky was charged with seven criminal counts — including securities fraud, commodities fraud and wire fraud — according to an indictment unsealed earlier on Thursday. He is one of several crypto moguls to be indicted in another blow for the industry, which is undergoing a reckoning after a slump in crypto prices led to the collapse of several companies, including exchange giant FTX. That company's founder, Sam Bankman-Fried, was charged with fraud last year, and has pleaded not guilty. U.S. Magistrate Judge Ona Wang said Mashinsky would be released on a $40 million bond secured by his Manhattan residence.

FTX filed a lawsuit on Wednesday against former managers of a Swiss business the bankrupt cryptocurrency exchange had acquired, looking to claw back at least $323 million to repay creditors and customers, WSJ Pro Bankruptcy reported. The lawsuit filed in the U.S. Bankruptcy Court in Wilmington, Del., alleged FTX overpaid for Digital Assets DA AG, the Swiss company that later became FTX Europe following a series of transactions in 2020 and 2021, despite knowing it “had limited business and no intellectual property beyond a business plan.” The new management overseeing FTX’s bankruptcy said in the lawsuit that the FTX Europe business has little value and is unlikely to be sold. The defendants are Digital’s co-founders and a Digital employee and shareholder before the FTX acquisition. FTX bought the Swiss company hoping to gain access to regulators to make it easier to do business and expand its customer base in Europe, FTX said in the lawsuit. In reality, the business didn’t have and never got the type of licenses that would have been useful to FTX in Europe, the lawsuit said.

Residents, nurses and local politicians gathered at a town hall meeting in Hollister, Calif., to voice their concerns about the future of Hazel Hawkins Memorial Hospital after the San Benito Health Care District's recent chapter 9 bankruptcy filing, Becker's Hospital Review reported. Members of the California Nurses Association recently voted "no confidence" in both the Hazel Hawkins board and the administration and argued that the bankruptcy filing was a potentially catastrophic and unnecessary step in resolving the hospital's financial issues, according to the report. During the July 6 town hall meeting, Mike Rabourn, research lead for the California Nurses Association, argued that the financial health of the healthcare district is not as dire as it seems. "Ultimately, what we found, in spite of all their tales of woe, when you look under the hood, the district is actually not doing so bad, especially in the last six months," Mr. Rabourn said, according to benitolink.com. "As of May, it’s actually in quite a strong financial position according to their own financial reports. I think everybody is surprised that they are so aggressively pursuing this bankruptcy process when they’ve actually engineered quite a financial recovery since the fiscal emergency." Mr. Rabourn argued that the hospital district is not financially insolvent — despite projections that it will run out of cash by November or December 2024 — and that it currently has more than 35 days cash on hand and recorded about $2 million in net income over the past 11 months.

Lawyers for a California man who says he developed a rare cancer from exposure to asbestos in Johnson & Johnson's talc-based baby powder on Monday urged a jury to order the company to pay heavy punitive damages, calling its conduct negligent and "despicable," Reuters reported. "A reasonably careful corporation would not sell a product that allowed carcinogens to be applied to babies," Joseph Satterley, a lawyer for Emory Hernandez Valadez, said in a closing argument at the end of a six-week trial in Alameda County Superior Court in California. J&J has consistently denied that its now-discontinued talc baby powder contains asbestos or causes cancer. Satterley asked jurors to award Hernandez punitive damages about nine times greater than so-called compensatory damages, which include $3.8 million for his medical costs as well as damages for pain and suffering. Satterley said the pain and suffering damages should be much larger than the medical costs. The U.S. Supreme Court has found that punitive damages should generally be no more than nine times compensatory damages, and that a higher ratio can be reduced on appeal as excessive. J&J's lawyers told the jury Monday that there was no evidence presented at the trial linking Hernandez's cancer to talc, and that the company had always gone out of its way to test its talc and ensure its safety.

Shareholders are suing Mallinckrodt, alleging the struggling pharmaceutical company made false and misleading statements about its financial health that resulted in investor losses, the Wall Street Journal reported. The company and three executives named in the suit received a court summons on Monday ordering them to appear in court within 21 days. Continental General Insurance and Percy Rockdale, plaintiffs who bought Mallinckrodt shares both this year and last year, said in a class-action complaint filed Friday that the company overstated its financial standing. The lawsuit cited Mallinckrodt’s statements about alleged improvements to its liquidity and balance sheet as well as its ability to fulfill obligations under a $1.7 billion opioid-related settlement agreement with state and local governments. Mallinckrodt last month delayed a $200 million payment to the opioid settlement trust. The company also missed interest payments to its bondholders, warning that it may need to file for bankruptcy a second time.

A U.S. judge said yesterday that he would consider dismissing the bankruptcy of a New York Roman Catholic diocese if the church cannot build more support among sexual abuse victims who have sued the church and its parishes, Reuters reported. Bankruptcy Judge Martin Glenn said during a court hearing in Manhattan that he was not eager to be the first judge to kick a Catholic diocese out of bankruptcy. But if the Diocese of Rockville Centre cannot make progress toward a comprehensive settlement of sexual abuse claims, it would be unfair to prevent abuse survivors from resuming their lawsuits in other courts, Judge Glenn said. "The survivors deserve an opportunity to be heard by a jury of their peers," Glenn said. "They've been held off too long." The diocese filed for chapter 11 bankruptcy in New York in October 2020, citing the cost of lawsuits filed by childhood victims of clergy sexual abuse. New York's Child Victims Act, which took effect in August 2020, temporarily enabled victims of child sexual abuse to file lawsuits over decades-old crimes. At least 20 other dioceses have filed for bankruptcy in response to New York's law and similar laws passed in other U.S. states. The diocese has estimated that its bankruptcy plan would provide between $185 million and $200 million in value to abuse survivors.

BlockFi Inc.’s past business with FTX appeared legitimate and gave management no reason to worry about lending to Sam Bankman-Fried’s crypto platform before it melted down amid allegations of fraud last year, according to a probe by independent BlockFi directors and its lawyers, Bloomberg News reported. Findings of the seven month investigation were made public Monday in New Jersey bankruptcy court to support a BlockFi settlement that would resolve potential legal claims related to the crypto lenders’ collapse against co-founders Zac Prince and Flori Marquez, as well as other company officers. Management, in exchange, has agreed to assist company lawyers in potentially lucrative actions against firms they blame for BlockFi’s collapse including FTX and failed crypto hedge-fund Three Arrows Capital. BlockFi management will serve as key witnesses in litigation involving FTX and Three Arrows, the outcome of which could result in $1 billion in value for creditors, the crypto lender said. Prince, Marquez and the other executives have also agreed to waive or reduce recoveries of their personal digital assets on BlockFi’s platform and contribute $2.2 million in cash to the company, according to court documents. The settlement must be approved by a judge.

The Florida state financial watchdog brought charges against Bittrex Inc. before the exchange filed for bankruptcy protection in May, a new filing has revealed, CoinGeek.com reported. The Florida Office of Financial Regulation (OFR) recently revealed that it issued a complaint to Bittrex on April 17, the same day the U.S. Securities and Exchange Commission (SEC) charged the exchange with operating an unregistered securities trading platform. Bittrex would surrender its Florida license two weeks later and, on May 8, filed for bankruptcy protection. Bittrex Inc. operated in the U.S. and was based in Seattle, with Bittrex Global overseeing operations outside the United States. OFR accused Bittrex of failing to segregate customer funds, failing to always maintain a surety bond in the correct amount, and a third charge which was redacted from the public court filings.

Major League Baseball says teams have collected 94% of the money they have been owed by Diamond Sports, the Associated Press reported. The company controls 19 networks under the Bally Sports banner and has been in chapter 11 bankruptcy proceedings in Texas since March. MLB took over rights to San Diego Padres telecasts on May 31 after a rights payment was missed. “Of the rights fees that have come due, I think we’ve collected 94% of those rights fees so far. And that’s really important,” MLB Commissioner Rob Manfred told the Baseball Writers’ Association of America on Tuesday. “We have backstopped clubs to make sure that there isn’t some unforeseen alteration in their revenue, and all that’s designed to put clubs in a position to not have disruption when it comes to the most important side of their business, that is putting a good team on the field.” MLB’s sales of Padres broadcasts in San Diego are “well into the five figures,” according to Manfred. “Well before the Diamond bankruptcy, we were kind of on the topic of that part of the media landscape changing,” he said. “Our goal from the beginning has been to make a transition from the current situation into a new model that did two things, number one, increase the availability of our games to fans, and number two, to minimize any financial disruption for clubs.”