The CFTC has ended its investigation into the bankruptcy of cryptocurrency lender Celsius and its former CEO Alex Mashinsky, finding it violated US rules, according to people familiar with the matter.
The investigation, conducted by lawyers at the CFTC’s enforcement unit, revealed that Celsius misled investors and failed to register with the regulator.
If a majority of CFTC commissioners agree to these findings, the agency could file a case in federal court as early as this month.
Celsius misleads investors, and their lack of scoring surfaces
the the findings The investigation shed light on the actions of Celsius and its former CEO, raising questions about their compliance with regulatory requirements. Celsius allegedly engaged in deceptive practices and failed to provide accurate information to investors.
By misleading investors, the lending platform is potentially putting their money at risk and undermining market transparency. Moreover, the failure to register with the CFTC raises concerns about the company’s compliance with regulatory oversight.
An independent examiner hired during Celsius’ bankruptcy shed more light on the company’s operations. The examiner found that Celsius had operated in a manner similar to a Ponzi scheme, raising concerns about the company’s business practices and its impact on investors. This finding adds weight to the allegations against Celsius and strengthens the case for regulatory action.
CEL token struggles at $0.15 | Source: CELUSD on TradingView.com
The potential case against Celsius and its former CEO has major implications for the crypto industry and regulatory enforcement. If the CFTC proceeds with the lawsuit, it would signal a strong stance on holding companies accountable for their actions and ensuring that investors are protected in the cryptocurrency market.
When Celsius filed for voluntary bankruptcy in July 2022, the lending company reportedly owed between $1 billion and $10 billion to creditors. The case is currently ongoing in the United States Bankruptcy Court for the Southern District of New York.
Implications for the crypto industry and regulatory enforcement
The allegations against Celsius and its former CEO highlight the need for increased regulatory scrutiny and oversight in the crypto sector. As the market continues to grow and attract more participants, it is critical to establish clear guidelines and enforce compliance to protect investors and maintain market integrity.
However, the potential case against Celsius demonstrates the regulatory authorities’ commitment to upholding these standards and addressing abuses that occur within the industry.
This case could set a precedent for future enforcement actions, shaping the regulatory landscape for the industry as a whole.
Featured image from IQ.Wiki, chart from TradingView.com
