Ex-Celsius Network CEO has been arrested and sued by the DOJ with accompanying charges from three federal agencies following investigations into the company’s collapse.
Alex Mashinsky, the former CEO of embattled cryptocurrency exchange Celsius Network, has been arrested today and charged by the United States Department of Justice (DoJ). Notably, Mashinsky was arrested following investigations into Celsius Network’s collapse.
Charges Against Mashinsky
According to a Bloomberg report today, the DOJ’s charges against Mashinsky were accompanied by a series of lawsuits from three regulatory agencies.
The agencies include the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), as well as the Federal Trade Commission (FTC).
The DOJ accused Mashinsky of orchestrating a malicious scheme between 2018 through July 2022 to defraud unsuspecting Celsius investors. Furthermore, prosecutors claim Mashinsky made false and misleading statements about his sales of CEL, the native token of Celsius.
Meanwhile, the SEC also charged Mashinsky with violating federal securities laws. In its complaint, the SEC alleged that both CEL and Celsius’ Earn Interest Program are unregistered securities.
Interestingly, the CFTC filed a different complaint against Mashinsky and Celsius, alleging that both parties engaged in a scheme to defraud thousands of unsuspecting investors.
Furthermore, the FTC accused Mashinsky of violating the Federal Trade Commission Act via the marketing and selling of its crypto lending product.
Meanwhile, Mashinsky’s legal woes have continued to increase. Earlier this month, New York Attorney General Letitia James accused the former Celsius CEO of misleading investors about the company’s financial health.Â
According to James, despite Celsius’ financial position, Mashinsky, who resigned as CEO in September, continued to mislead investors in an attempt to encourage more cash inflow.
Celsius Network Debacle
Recall that Celsius Network was one of the prominent crypto firms that collapsed last year. Celsius gained popularity in crypto due to its high interest in crypto deposits.
However, Celsius was left with a giant hole in its balance sheet after TerraForm Labs’ algorithmic stablecoin lost its peg to the dollar. Consequently, Celsius could not meet a massive spike in customer withdrawals, thus, leading to its collapse.
Celsius later filed for Chapter 11 bankruptcy protection last July, with crypto consortium Fahrenheit winning the bid to acquire the lending platform’s assets.
Interestingly, the price of CEL is up 11% in the past 24 hours. According to CoinGecko data, CEL is changing hands at $0.171.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
-Advertisement-
