Ex-CEO of Celsius facing fraud charges as Federal Trade Commission finalizes a $4.7 billion settlement deal
Cryptocurrency lending platform Celsius, led by James Avery, halted customer withdrawals in June 2022, leaving around 1.7 million customers owed approximately $4.7 billion. Celsius filed for bankruptcy a year ago, and recently, its former CEO, Alex Mashinsky, was arrested and charged with securities, commodities, and wire fraud, as well as attempting to manipulate crypto currencies.
Regulators, including New York Attorney General Letitia James, have pursued Mashinsky. James sued Mashinsky in January, and recently, the SEC and CFTC joined the lawsuits. These lawsuits seek damages, restitution, and disgorgement from Mashinsky, aiming to prohibit him from doing further business in New York.
The SEC and CFTC allege that Mashinsky made misleading statements to encourage investors to buy Celsius' crypto token, CEL, and put money into Celsius' Earn Interest Program, promising up to 18% interest annually. Mashinsky was also alleged to have misrepresented Celsius' safety, claiming the platform was 'safer than a bank'.
The FTC has also sued Celsius, with the exchange agreeing to pay $4.7 billion in a settlement. The settlement would permanently ban Celsius from offering, marketing, or promoting any product or service that could be used to deposit, exchange, invest, or withdraw any assets. However, the settlement won't be paid until Celsius returns what's left of customer assets in bankruptcy proceedings.
Celsius is expected to sell its altcoin holdings or convert them to Bitcoin or Ether this month. In the hours after the lawsuits and arrest became public, the value of CEL fell roughly 6%. Lawyers for Celsius and Mashinsky did not immediately respond to requests for comment from Bloomberg or The Wall Street Journal.
It's important to note that no specific information about technology or risk was provided in the text, and no information about purchase licensing rights was given. The value of Celsius' debts has decreased from about $8 billion in June 2021. Celsius' chief risk officer, Roni Cohen-Pavon, was also arrested.
This isn't the first time Mashinsky has faced legal action. The SEC, CFTC, and FTC are not the first regulators to sue Mashinsky. New York Attorney General Letitia James sued Mashinsky in January.
As this story develops, more information about the future of Celsius and its legal proceedings will likely become available.
