- Celsius founder Alex Mashinsky was yesterday taken into custody after being accused of multiple crimes relating to his running of the company
- Three US entities have leveled a total of seven charges against him, including fraud and market manipulation
- Celsius collapsed last year with a $1.2 billion balance sheet debt
Alex Mashinsky, the founder of Celsius Network, was yesterday taken into custody by authorities on allegations of defrauding customers of the collapsed cryptocurrency exchange. The Justice Department has leveled seven criminal charges against Mashinsky, encompassing securities fraud, commodities fraud, and market manipulation. In addition to Mashinsky’s arrest, Roni Cohen-Pavon, the former chief revenue officer of the exchange, has also been charged. Both individuals are accused of engaging in a long-running scheme to deceive customers regarding the true value of Celsius’s token.
Three Bodies Level Seven Charges
Three federal agencies have initiated civil lawsuits against Alex Mashinsky and Celsius, alleging fraudulent practices that harmed customers who relied on the company for earning returns by lending out their tokens. The Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Federal Trade Commission (FTC) are behind the legal action, joining the growing wave of regulatory scrutiny and enforcement targeting the digital asset industry.
Representatives for Celsius Network did not provide comments when approached. Mashinsky’s lawyer, on the other hand, stated that the Celsius founder refutes the allegations levied against him. If convicted of securities fraud, the 57-year-old could face a maximum prison sentence of 20 years. During his court appearance, Mashinsky pleaded not guilty to the charges and was released on a $40 million bond.
Celsius Collapse Sparked Crypto Contagion
The collapse of Celsius Network in 2022 marked the beginning of a series of prominent company failures within the crypto space, culminating in the demise of the crypto-exchange FTX in November. As part of the legal actions, the FTC has reached a settlement agreement with Celsius, amounting to $4.7 billion. It is important to note that the judgment will be suspended until the creditors and customers have been repaid through the bankruptcy proceedings.
Many customers of Celsius Network continue to experience asset lock-ups and the uncertainty of receiving only a fraction of their assets back during the bankruptcy process. When Celsius filed for bankruptcy protection in July 2022 it revealed a $1.2 billion deficit in its balance sheet.
