According to Bloomberg a reportAlex Mashinsky, former Celsius CEO, was arrested on Thursday on criminal charges filed by several US regulators. The crypto company filed for bankruptcy in 2022 as other large entities in the space collapsed as prices plummeted in the sector.
According to the report, the US Securities and Exchange Commission has filed a lawsuit against Mashinsky and Celsius. In a document filed in the Southern District of New York, the regulator claims that the defendants raised “billions of dollars” through their alleged bid Unregistered securities.
Another giant crypto falls? The centenary founder is under arrest
Furthermore, the regulator claims that Mashinsky made “false promises” to his investors by offering them an “interest earning program”. This financial product allowed customers to lock tokens on the platform to earn a return.
The SEC claims that the company manipulated its native token, CEL, for its own gain. Thus, Celsius “lied” and took its customers’ funds via the token, which they claim acts as security for crypto assets.
The crypto company and its founder have offered this and other products without registering with the Securities and Exchange Commission. The document stated the following in relation to the alleged criminal proceedings:
Defendants made many false and misleading statements to induce investors to purchase CEL and invest in the interest-earning program. Among other false representations, the defendants misrepresented Celsius’s centralized business model and risk to investors by claiming that Celsius did not make unsecured loans, the company did not engage in risky trading, and interest paid to investors represented 80% of the company’s revenue.
Mashinsky has been sued by former clients, associates, and the state of New York for fraud and other charges. As reported by Bitcoinist, the cryptocurrency founder allegedly used his clients’ funds to buy real estate and supposedly launder money via decentralized exchanges.
According to reporter db, Mashinsky has been sued by all major US regulators, the Securities and Exchange Commission, the Department of Justice (DOF), the Commodity and Futures Trading Commission (CFTC), among others. The United States accuses Mashinsky of allegedly running an “organized scheme to defraud clients of the Celsius Network”.
SEC, DOJ, CFTC, FTC sued/charged with Celsius and Machinsky in the last hour
Rough day 💀
– dB (@tier10k) July 13, 2023
As of this writing, Bitcoin is trading at $30,600 and it is heading to the upside on the daily chart.
Cover image from Unsplash, chart from Tradingview