Key takeaways:
- Celsius Network reportedly violates US regulations before declaring bankruptcy.
- If the investigation’s conclusions are accepted by the CFTC commissioners, Celsius and Mashinsky may face legal action.
Celsius Network, a platform for lending cryptocurrencies, reportedly violates US regulations before declaring bankruptcy, according to investigators from the Commodity Futures Trading Commission (CFTC). According to Bloomberg, the company’s former CEO, Alex Mashinsky, was also held accountable for these violations.
If the investigation’s conclusions are accepted by the CFTC commissioners, Celsius and Mashinsky may face legal action within the next month. According to Bloomberg’s report, investigators found that Celsius violated regulations and intentionally misled investors when Mashinsky served as its CEO.
These disclosures complicate the ongoing investigation into Celsius, which has come under fire from several directions.
Recent allegations of market manipulation against Wintermute, one of Celsius’s market makers, come from former Celsius investors. The plaintiffs claim that Wintermute engaged in wash trading to increase Celsius’s trading volume fictitiously. Although the degree of Wintermute’s connection to Celsius is unknown, the market maker has refuted all misconduct accusations.
Celsius has been regaining control of its financial status during various litigation challenges. According to a June 30 court filing, the bankrupt crypto lender has been granted permission by the bankruptcy court to convert all of its cryptocurrencies into Bitcoin (BTC) and Ethereum (ETH) as of July 1, 2023.
This action could be seen as an effort by Celsius to increase asset value and possibly fulfill any upcoming financial and legal responsibilities. The choice was made after Celsius and the SEC held talks in the wake of regulatory moves that categorized several digital assets as securities.
Judge Martin Glenn responded by allowing Celsius to make all commercially reasonable steps to maximize the value of the “altcoins they intend to convert to BTC or ETH.”
The continuing bankruptcy proceedings for Celsius are currently progressing. A crucial step towards Celsius’s reopening and paying creditors again was made earlier this year when crypto consortium Fahrenheit won the court-approved auction to sell its assets. According to Celsius’s May 25 press release, Fahrenheit will supply the money, management team, and technology required to create and run a new business, NewCo.
According to Bloomberg, neither the SEC nor officials of the US Attorney’s Office for the Southern District of New York have expressed a desire to comment on the investigations’ current state.
