Celsius Accused of Fraud by SEC, CFTC, and FTC

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  • Alex Mashinsky, former Celsius Network CEO, is facing legal troubles after being charged with seven criminal charges and a court order to freeze his bank accounts.
  • The charges involve fraud allegations, with federal prosecutors claiming he deceived investors and engaged in risky trading practices.
  • Federal authorities claim Mashinsky profited $42 million through fraudulent actions.

Former Celsius Network CEO, Alex Mashinsky, is facing some serious legal trouble as federal authorities have taken action against him. In July, he was hit with seven criminal charges, and now the Department of Justice has issued a court order to freeze his bank accounts.

This freezing order affects accounts held at various financial institutions, including Goldman Sachs, Merrill Lynch, First Republic Securities, SoFi Bank, and SoFi Securities. It’s not just bank accounts either; the order also mentions a property in Texas that Mashinsky co-owns with his wife, Kristine.

The charges against Mashinsky involve allegations of fraud, with federal prosecutors claiming that he deceived investors and that his company, Celsius, engaged in risky trading practices. On top of that, regulatory bodies like the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Federal Trade Commission (FTC) have brought civil charges against Celsius.

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These regulators argue that Celsius repeatedly provided false information to customers about the safety of its platform and sold securities that weren’t properly registered. Despite evidence to the contrary, they say the company misleadingly marketed itself as a secure alternative to traditional banking.

It’s important to note that Celsius was just one of many crypto firms that faced financial difficulties last year. It promised investors significant returns and assured them of their funds’ safety. However, in June, it suddenly stopped user withdrawals, citing “extreme market conditions,” and a month later, it filed for bankruptcy, revealing a deficit of $1.2 billion in assets compared to liabilities.

Federal authorities are alleging that Mashinsky knowingly reassured investors about the platform’s safety, all while being aware of its risks. They claim that he personally profited to the tune of $42 million through fraudulent actions at the expense of Celsius Network customers.