Alex Mashinsky, the former CEO of bankrupt cryptocurrency lending firm Celsius, has been charged with fraud by the US Attorney for the Southern District of New York and the FBI. The Justice Department announced the charges on July 13, accusing Mashinsky of securities fraud , commodity fraud, and wire fraud. The allegations include defrauding customers and misleading them about the platform's success, profitability, and nature of investment with user funds. Celsius, on the other hand, has entered into a non-prosecution agreement and accepted responsibility for its role in the fraudulent scheme.
Mashinsky and former Celsius Chief Revenue Officer Roni Cohen-Pavon will also face charges related to conspiracy, securities fraud, market manipulation, and wire fraud in connection with manipulating the prices of Celsius tokens. The indictment allegations that Mashinsky made approximately $42 million in profit from the sale of CEL tokens by artificially inflating their prices, while Cohen-Pavon pocketed around $3.6 million. Mashinsky was arrested on July 13, while Cohen-Pavon's whereabouts are currently unknown.
The charges by the US Attorney's Office and the FBI are concurrent with those filed by the Commodity Futures Trading Commission (CFTC). The CFTC accuses Celsius of acting as an unregistered commodity pool operator, with Mashinsky being an unregistered affiliate. The commission alleges that they Violated the Commodity Exchange Act. These charges come in the wake of Celsius' collapse and financial troubles in 2022, during which the platform suspended withdrawals. Various state securities regulators in the US have also been investigating the company.
Earlier legal action was taken by the New York attorney general's office, which filed a lawsuit against Mashinsky on January 5, accusing him of misleading Celsius investors and causing billions of dollars in losses. The Securities and Exchange Commission (SEC) also filed a civil lawsuit on July 13, making similar allegations against Celsius and Mashinsky. Additionally, the Federal Trade Commission (FTC) imposed a fine of $4.7 billion on Celsius.
The charges against Mashinsky and the legal actions against Celsius highlight the ongoing scrutiny and legal challenges faced by the company. The collapse of Celsius and the allegations of fraud have resulted in investigations by multiple regulatory bodies, indicating the seriousness with which authorities are approaching cases involving cryptocurrency platforms and protecting investors.
