Celsius and CEO ‘Broke CFTC Rules’ Prior to Implosion

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  • Celsius and its CEO Alex Mashinksy may have broken CFTC rules prior to Celsius’ implosion
  • A CFTC investigation has allegedly revealed unspecified infractions
  • The issue could relate to Celsius allegedly being insolvent as far back as 2020

Celsius and its CEO Alex Mashinsky broke US financial rules before it imploded last year and could face legal action, according to Bloomberg. The outlet cites two sources “familiar with the matter” as saying that a Commodity Futures Trading Commission (CFTC) investigation has concluded that Celsius and Mashinsky both contravened unspecified regulations set by the body and will face federal action, with huge financial penalties possible for both entities if found guilty.

Celsius and Mashinksy Could be in Deep Trouble

Bloomberg’s sources, who preferred not to be named due to the confidential nature of the claim, revealed that attorneys from the enforcement unit have found evidence suggesting that Celsius misled investors and should have registered with the regulatory body while it was active before its collapse in June last year. It was also alleged that Mashinsky personally violated regulations, although no specifics were given. 

The issues could relate to the revelation in September last year that, according to the Vermont Financial Regulator, Celsius was in financial trouble as far back as 2019 and that the company also operated against securities laws. The regulator added at the time that Celsius’ debts exceeded assets if the company’s stake in the CEL, Celsius’ native token, was removed from the equation, making it technically insolvent.

CFO Admitted Issues Present in 2020

Celsius’ CFO at the time, Chris Ferraro, admitted to the Celsius bankruptcy court at the same time that the company started going under in 2020 and suggested that the company may have “at some point in time” been operating a Ponzi scheme by paying returns to existing investors using funds from new investors. This was caused by low profits while Celsius promised a high ROI.

According to Bloomberg, if the majority of the CFTC’s commissioners reach a consensus on the conclusion, the agency may initiate legal proceedings in federal court later this month. Neither the CFTC, Celsius nor Mashinsky has commented on the matter.