Alex Mashinsky, the founder and former CEO of bankrupt cryptocurrency lender Celsius Network, has been arrested and charged with fraud, as announced by a US prosecutor in New York. Three federal regulatory agencies have also sued his company alongside Mashinsky.
Criminal Charges and Indictment Details
Mashinsky, 57, is facing seven criminal counts, including securities fraud, commodities fraud, and wire fraud, as stated in the unsealed indictment. Additionally, authorities have charged Roni Cohen-Pavon, Celsius’ former chief revenue officer, with four criminal counts. Lawyers for Mashinsky and Celsius, as well as Cohen-Pavon’s attorney, have not yet responded to requests for comment.
Allegations of Market Manipulation and Fraudulent Schemes
The charges against Mashinsky and Cohen-Pavon involve the market manipulation of Celsius’ crypto token, Cel, as well as a fraudulent scheme to manipulate the token’s price. The indictment also includes wire fraud related to the manipulation of the token.
Lawsuits from Regulatory Agencies
In addition to the criminal charges, the US Securities and Exchange Commission (SEC) has filed a lawsuit against Mashinsky and Celsius. The SEC alleges that Mashinsky and Celsius raised billions of dollars through the sale of unregistered crypto asset securities and deceived investors regarding the company’s financial success. The US Commodity Futures Trading Commission and the Federal Trade Commission have also filed lawsuits against Celsius and Mashinsky, with the latter reaching a settlement that permanently bans the platform from handling customer assets.
Collapse of Celsius and Additional Lawsuits
Celsius, a New Jersey-based crypto lender, filed for Chapter 11 bankruptcy protection in July last year after freezing customer withdrawals. The bankruptcy filing was part of a series of collapses in the cryptocurrency sector. The recent lawsuits from regulatory agencies add to the challenges faced by the platform Network and its founder. Earlier this year, the New York state’s attorney general sued Mashinsky, alleging that he defrauded investors by concealing the failing health of the lending platform. These legal actions contribute to the uncertain regulatory environment surrounding the crypto industry, following recent lawsuits against major exchanges such as Binance and Coinbase Global by the SEC.
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