Celsius Network, a bankrupt cryptocurrency lender, has been fined $4.7 billion by the Federal Trade Commission (FTC). However, the judgment will be temporarily suspended to allow Celsius to return remaining assets to consumers during the bankruptcy proceedings. As part of the settlement, Celsius and its affiliates will be permanently prohibited from offering or promoting any product or service related to depositing, exchanging, investing, or withdrawing assets.
The New Jersey-based company, known for its cryptocurrency products and services, has been accused of misappropriating over $4 billion in consumer assets. The FTC allegations that Celsius co-founders Alex Mashinsky, Shlomi Leon, and Hanoch Goldstein marketed the platform as a s safe place for storing cryptocurrencies while engaging in fraudulent activities. Mashinsky, Leon, and Goldstein have yet to agree to the FTC settlement, and their case will proceed to federal court.
According to the FTC, Celsius provided $1.2 billion in unsecured loans, made false claims about a $750 million user insurance policy, and lacked proper asset and liability tracking. The FTC also states that the executives deceived customers to prevent them from withdrawing the cryptocurrency deposits, while withdrawing significant amounts of cryptocurrency for themselves prior to the company's bankruptcy filing. This has resulted in consumers losing substantial amounts of their savings, college funds, and retirement savings.
In addition to the FTC charges, Celsius and its co-founders are facing legal action from other regulatory bodies. The US Securities and Exchange Commission and the Commodity Futures Trading Commission have also filed charges against Celsius, while Alex Mashinsky has been indicated by the US Department of Justice on seven fraud-related charges and is currently detained. Celsius had previously filed for bankruptcy in July of the previous year.
