Celsius founder Alex Mashinsky has been arrested after the company was sued by the Securities and Exchange Commission (SEC).
During the peak of the bull markets in 2021, various crypto companies offered high yields on their digital asset borrowings. But after last year’s bear market, many crypto lenders filed for bankruptcy, and users’ funds are stuck on those platforms.
Mashinsky and Celsius Charged by US Authorities
According to Bloomberg, the SEC sued the bankrupt crypto lender Celsius and its founder Alex Mashinsky. Additionally, a person familiar with the matter mentioned that Mashinsky was arrested Thursday morning, but the criminal case is not public yet.
The court document mentions that SEC alleged both Celsius and Mashinsky for:
- Misrepresentation of central business model and risks to investors.
- Misrepresentation of financial success.
- Misrepresentation of the safety of customers’ assets on the Celsius platform.
- Market manipulation of Celsius (CEL) tokens
The authorities charged both parties with five counts that include fraud and unregistered offers and sales of securities.
Moreover, other regulators, such as the Department of Justice (DOJ), Commodities Futures Trading Commission (CFTC), Federal Trade Commission (FTC), and the US Government filed similar charges against Celsius and Mashinsky.
For a rundown of the best crypto lending platforms, read our Learn guide.
The FTC banned the Celsius network from trading and imposed a $4.7 billion fine. And Mashinsky denied the FTC settlement. The New Jersey-based firm sold various cryptocurrency products and services to consumers, such as interest-bearing accounts, personal loans secured by cryptocurrency deposits. It also owned a cryptocurrency exchange.
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