Alex Mashinsky and Celsius Crypto Lender Facing Legal Troubles
Recent developments have seen Alex Mashinsky, the former CEO of the bankrupt crypto lender Celsius, arrested as lawsuits from various U.S. financial regulators loom over him and his company.
Details of the Lawsuits
- SEC, CFTC, and FTC lawsuits target Celsius and Alex Mashinsky.
- Accusations include misleading statements about the company’s business.
Legal Actions and Settlement
Mashinsky, aged 57, faces charges related to defrauding Celsius Network’s customers as alleged in the unsealed indictment. The SEC, CFTC, and FTC have all taken legal action against Mashinsky and the company. Mashinsky’s arrest was reported early Thursday morning by Bloomberg.
- FTC settlement permanently bans Celsius from handling customer assets.
- A payment of $4.7 billion was suspended for the return of investor money during bankruptcy.
Financial Distress and Allegations
Celsius, known for high interest rates on digital-asset deposits, faced financial challenges leading to bankruptcy, triggered by the collapse of the TerraUSD stablecoin and a downturn in the crypto market in May 2022.
Allegations include:
- $800 million in losses for Celsius in 2021.
- $165 million in losses in the first quarter of 2022.
- Misleading claims about financial stability and services.
Misleading Statements and Allegations
The complaints against Celsius, Mashinsky, and others include misleading statements regarding the company’s business and the CEL crypto token.
Allegations involve:
- Misleading investors about financial stability and services.
- Falsely claiming a $750 million insurance policy for deposits.
Additional Allegations and Lawsuits
Further accusations include:
- Misleading investors to purchase CEL token and join the Earn Interest Program.
- Misrepresentation of Celsius’s financial performance.
Broader Impact on the Crypto Industry
These legal actions are part of a larger trend targeting the cryptocurrency industry, with various companies and individuals under scrutiny for alleged misconduct.
Other notable cases include:
- FTX co-founder Sam Bankman-Fried accused of mishandling funds.
- SEC lawsuits against Binance, Coinbase, and Kraken.
In May, a consortium of investors purchased some of Celsius’s assets at auction as part of bankruptcy proceedings.