Former Celsius CEO Arrested and Indicted on Multiple Charges Amidst Lawsuits by Regulatory Agencies

Alex Mashinsky, the ex-CEO of Celsius peer-to-peer platform for decentralized finance, was arrested and charged with fraud in the middle of June. Unsealing an indictment in New York on Thursday brings forth several charges, including securities fraud, wire fraud, and commodities fraud against the former CEO. Mashinsky and Celsius were also sued by the Commodity Futures Trading Commission (CFTC) and several other regulatory entities. Looking at the case, the company has essentially caused its own downfall and induced a crisis from which it will be challenging to recover.

Reading Time: 2 minutes

Celsius fraud

Illustration: Lenka T.

Former Celsius CEO Charged with Fraud

When Celsius entered the market, the project looked promising. Even the CEO promoted it as a platform safer than a bank. The company aimed to generate high returns by offering low-risk collateralized loans to reputable clients. However, Celsius grew big soon after its inception, and it didn’t take long to notice the company having trouble generating enough revenue to pay the high returns. Instead of facing the issue like a champ, the company and its CEO held its investors in the dark by concealing losses. That is at least what the lawsuit filed by the New York attorney general against Mashinsky alleges.  

Celsius CEO

Mashinsky; Source: Google

At the beginning of the year, the New York attorney general filed a lawsuit against the former Celsius CEO, alleging that the company was defrauding its investors. Mashinsky was accused of misleading investors who had trusted Celsius enough to place billions of dollars worth of digital assets with the company.

Fast forward to the present moment, and the federal prosecutors are unveiling seven charges against Mashinsky and the CEO key executive Roni Cohen Pavon. Both are being charged with fraud and price manipulation. No wonder they had to file for bankruptcy.

Mashinsky’s Arrest and a Multi-billion Dollar Settlement

The charges against Mashinsky ultimately led to his arrest. He was detained last Thursday on federal charges.

According to a DOJ indictment, Mashinsky and several other members of his team are charged with committing several offenses, including securities fraud, commodities fraud, wire fraud, and price manipulation of Celsius’ token CEL. In addition to being chased by the DOJ, these players are facing a bunch of other lawsuits filed by the US Securities and Exchange Commission, Commodity Futures Trading Commission, and Federal Trade Commission.

Speaking of the FTC, this regulatory body has imposed a fine $4.7 billion on Celsius for engaging in deceptive acts.

Back to the DOJ case, Mashinsky pleaded not guilty and was released on a $40 million bond. According to Mashinsky’s lawyer, the former Celsius CEO denies the allegations and aims to defend himself in court. However, if convicted, the Mashinsky and the rest of the gang will spend years, if not decades, in prison.

Jelena is a content writer dedicated to learning about all things crypto. Her hobbies are playing chess, drawing, baking, and going on long walks. During winter, she usually spends her leisure time reading books.