Key takeaways:
- The United States Securities and Exchange Commission is suing Celsius Network.
- Alex Mashinsky, the former CEO of Celsius, was detained on July 13 following an investigation.
Celsius Network, one of the cryptocurrency lending companies that failed in 2022, is being sued by the United States Securities and Exchange Commission (SEC).
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 unlicensed and deceptive offers and by issuing “crypto asset securities.”
The SEC said in the lawsuit that Mashinsky misrepresented its “Earn Interest Program” loan program, which offered investors the appearance of a secure investment. The SEC reported that Celsius and the executive had also deceitfully manipulated the price of Celsius’ own cryptocurrency asset security, the Celsius token.
The specific charge made by the securities authority was that Celsius and Mashinsky had misrepresented “significant financial events and the financial condition of the company” in public.
According to the regulator, this misrepresentation started with the Celsius initial coin offering in March 2018 and continued until “days before Celsius halted customer withdrawals off its platform.”
According to reports, Alex Mashinsky, the former CEO of Celsius, was detained on July 13. According to Bloomberg, which cited people familiar with the situation, the former CEO was reportedly detained following an investigation into the company’s demise.
The US Department of Justice accused Mashinsky of fraud and intending to manipulate the market. Mashinsky was recently found guilty by CFTC investigators, who came to the conclusion that the former CEO violated various US laws prior to the collapse of the business in 2022.
The probe into the former CEO started after the New York Attorney General sued Mashinsky on January 5. The former CEO allegedly deceived investors and caused losses worth billions of dollars, according to the NYAG. A few months after the SEC filed litigation against Binance and Coinbase, Mashinsky was detained, and Celsius was sued.
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. In Celsius’s words, the money will enable it to support “certain operations during the restructuring process.” Mashinsky stated in the release that this was the best course of action for the community and business. He further added:
“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.”
When the cryptocurrency lender abruptly stopped allowing withdrawals on the platform in June of last year, problems for Celsius and its former CEO started to arise. Securities authorities from five separate US states began looking into Celsius on June 16, 2022, and a month later, the platform filed for bankruptcy.
