The United States Attorney for the Southern District of New York and Federal Bureau of Investigation have announced fraud charges against the former CEO of bankrupt crypto lender Celsius, Alex Mashinsky.
In a July 13 announcement, the U.S. Justice Department said it had charged Mashinsky with securities fraud, commodities fraud, and wire fraud related to allegedly defrauding customers and misleading them about Celsius’ “success, profitability, and the nature of the investments” the platform made with user funds. However, authorities said they had reached a “non-prosecution agreement” with Celsius, which “agreed to accept responsibility for its role in the fraudulent schemes”.
“If you rip off ordinary investors to line your own pockets, we will hold you accountable,” said U.S. Attorney Damian Williams. “Whether it’s old-school fraud or some new-school crypto scheme, it doesn’t matter one bit. It’s all fraud to us. And we’ll be here to catch it.”
Today Ian McGinley, @CFTC Director of Enforcement, will participate in a press conference at 11:30 a.m., EDT with @SDNYnews, @FBI, and @SECGov to announce the enforcement action against Celsius Network and Alexander Mashinsky. Watch live: https://t.co/XajNGYcV3y
— CFTC (@CFTC) July 13, 2023
Former Celsius chief revenue officer Roni Cohen-Pavon and Mashsinky will also face charges of conspiracy, securities fraud, market manipulation, and wire fraud related to manipulating the price of the CEL token. Authorities reportedly arrested Mashinsky on July 13 as part of the indictment.
The charges came amid a slew of legal actions against Celsius and Mashinsky following the collapse of the platform and financial difficulties in 2022. Celsius suspended withdrawals on its platform, and many U.S. state securities regulators had also been investigating the firm.
The New York Attorney General’s office filed a suit against Mashinsky on Jan. 5, alleging that the former CEO misled Celsius investors, resulting in billions of dollars in losses. The U.S. Securities and Exchange Commission (SEC) followed with its own lawsuit on July 13, citing similar allegations against Celsius and Mashinsky, but also charging the firm with violations of securities laws.
This is a developing story, and further information will be added as it becomes available.