Celsius Network, one of the cryptocurrency financing firms that failed in 2022, is currently the target of enforcement action by the United States Securities and Exchange Commission.
On July 13, the securities agency filed a lawsuit against Alex Mashinsky, the former CEO of Celsius, alleging that the company and the executive raised “billions of dollars” through unregistered and fraudulent offers, as well as selling “crypto asset securities.”
The SEC said in the complaint that Celsius and the executive deceptively manipulated the price of Celsius’ own cryptocurrency asset security, the Celsius token and that Mashinsky deceived investors that their money would be safe using its lending program, known as the “Earn Interest Program.” This misrepresentation, according to the securities regulator, occurred from the very beginning of the CEL initial coin offering in March 2018 until “days before Celsius halted customer withdrawals off its platform.” The securities regulator particularly accused Celsius and Mashinsky of publicly misrepresenting “significant financial events and the financial condition of the company.”
According to reports, Mashinsky was arrested on Thursday morning as a result of an investigation into the company’s bankruptcy.
The Commodity Futures Trading Commission has been reported to have found that Celsius and Mashinsky violated multiple US laws and regulations before the company’s collapse last year, according to the SEC’s case, which was filed not long after. According to a separate article published by Bloomberg on July 6, CFTC enforcement division lawyers discovered that Mashinsky violated many US laws as Celsius deceived investors and neglected to register with the regulator.
On the same day that Celsius formally announced that the firm had begun voluntary Chapter 11 proceedings, both the action and the arrest took place. According to the company, Celsius has $167 million in cash on hand. The money will, in Celsius’s words, allow it to support “certain operations during the restructuring process.”
Mashinsky stated in the statement that “this is the right decision for our community and company.” He continued, 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.”
