The US Securities and Exchange Commission (SEC) has taken legal action against Celsius Network, a cryptocurrency lending firm that collapsed in 2022. On July 13, the SEC filed a lawsuit against former Celsius CEO Alex Mashinsky and Celsius, accusing them of conducting an unregistered fraudulent offering and selling crypto asset securities. The complaint allegations that Mashinsky made false promises of safe investments through the "Earn Interest Program" and manipulated the price of Celsius's own crypto asset security.
The SEC specifically accuses Celsius and Mashinsky of misrepresenting significant financial events and the company's financial position. According to the regulator, this misrepresentation occurred from the inception of Celsius's initial coin offering in 2018 until shortly before e customer withdrawals were halted. Mashinsky was reportedly arrested following an investigation into the company's collapse.
The SEC's lawsuit follows findings by the US Commodity Futures Trading Commission (CFTC) that Celsius and Mashinsky violated multiple US regulations prior to the company's bankruptcy. The CFTC's enforcement division found that Celsius misled investors and failed to register with regulators, while Mashinsky violated various US regulations.
On the same day as the SEC's lawsuit and Mashinsky's arrest, Celsius officially initiated a voluntary Chapter 11 bankruptcy filing. The company stated that it has $167 million in cash to support certain businesses in the restructuring process. Mashinsky express ed confidence in the company's future and emphasized the strong and experienced team leading Celsius through this process.
In January 2023, Mashinsky was indicated by the New York Attorney General for allegedly making false and misleading statements that resulted in billions of dollars in investor losses. The recent legal actions highlight the regulatory scrutiny and legal challenges faced by Celsius Network and its former CEO.
