The United States Securities and Exchange Commission is taking action against Celsius Network, one of the cryptocurrency lending firms that collapsed in 2022.
The securities regulator filed a lawsuit against Celsius’ former CEO, Alex Mashinsky, on July 13, charging the executive and Celsius for raising “billions of dollars” through unregistered and fraudulent offers, as well as selling “crypto asset securities.”
In the complaint, the SEC argued that Mashinsky falsely promised investors a safe investment with its lending service known as the “Earn Interest Program.” Celsius and the executive also fraudulently manipulated the price of Celsius’ own crypto asset security, the Celsius (CEL) token, the SEC wrote.
The securities regulator specifically alleged that Celsius and Mashinsky were publicly misrepresenting “significant financial events and the financial condition of the company.” According to the regulator, such misrepresentation took place from the very beginning of the CEL initial coin offering in March 2018 until “days before Celsius halted customer withdrawals off its platform.”
Mashinsky was also reportedly arrested on Thursday morning, following a probe into the company’s collapse.
The SEC’s lawsuit came shortly after the Commodity Futures Trading Commission reportedly found that Celsius and Mashinsky broke several U.S. regulations before the company’s implosion last year.
On July 6, Bloomberg also reported that attorneys from the CFTC’s enforcement division found that Celsius misled investors and failed to register with the regulator, while Mashinsky broke several U.S. regulations.
The action and the arrest came on the same day with Celsius officially announcing that the firm has initiated voluntary Chapter 11 proceedings. Celsius has $167 million in cash on hand, the firm noted. According to Celsius, the funds will allow it to support “certain operations during the restructuring process.”
Related: Former Celsius CEO Alex Mashinsky reportedly arrested
“This is the right decision for our community and company,” Mashinsky said in the announcement. He added:
“We have a strong and experienced team in place to lead Celsius through this process. I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company.”
Mashinsky was previously sued by New York Attorney General Letitia James in January 2023. The complaint alleged that the Celsius founder and former CEO made numerous “false and misleading statements,” which led to investors losing billions.
Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.
Magazine: Should you ‘orange pill’ children? The case for Bitcoin kids books
Hits: 0
