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Celsius ex-CEO Alex Mashinsky arrested for fraud

Mashinsky has been charged with multiple counts of fraud and market manipulation.

Alex Mashinsky - Celsius

Alex Mashinsky/WebSummit/CC BY-2.0.

The founder and former CEO of bankrupt crypto lender Celsius Alex Mashinsky has been arrested and charged with fraud.

Mashinsky has been accused of misleading investors by portraying Celsius “as a modern day bank, where customers could safely deposit crypto assets and earn interest”.

According to the indictment, the crypto platform was, in fact, operating “as a risky investment” fund.

Mashinsky has been charged with securities fraud, commodities fraud and wire fraud, and alongside the criminal case, three US regulators have issued parallel civil lawsuits against him.

Mashinsky has pleaded not guilty to the fraud charges brought against him for misleading customers and artificially inflating the value of  CEL (Celsius’ own crypto token).

The US Securities and Exchange Commission (SEC) has charged him with violating registration and anti-fraud provisions, manipulating the market of CEL, misrepresenting aspects of the business and making false statements about trading and business strategies, and offering an unregistered lending product.

“Celsius lied to investors by presenting itself as a safe investment opportunity and a chance to gain financial freedom, but, behind the scenes, the company operated a failing business model and took significant risks with investors’ crypto assets,” SEC Enforcement Division director  Gurbir Grewal said.

“Thousands of retail investors have experienced significant financial hardship as a result of Celsius’s and Mashinsky’s illegal conduct, and today we are holding Celsius and Mashinsky responsible for defrauding thousands of retail investors.”

Celsius’s former chief revenue officer Roni Cohen-Pavon was also charged in the case, but prosecutors currently believe him to be abroad. 

The SEC is looking to fine Mashinsky and to ban him from both acting as an officer or director of a public company and being part of the cryptocurrency industry.

The Commodity Futures Trading Commission and the Federal Trade Commission are also looking to fine Mashinsky.

Mashinsky was sued for defrauding investors of billions of dollars earlier this year by hiding the platform’s “dire financial condition” after the company declared bankruptcy last July.