SEC and other U.S. authorities sued Celsius, CEO Mashinsky arrested

650 billion yen fine from the Federal Trade Commission

Several U.S. authorities, including the U.S. Department of Justice, the U.S. Securities and Exchange Commission (SEC), the U.S. Commodity Futures Trading Commission (CFTC), and the Federal Trade Commission (FTC), announced on the 13th that bankrupt crypto asset (virtual currency) lenders I sued Celsius Network.

The Federal Trade Commission (FTC) alleges that Celsius co-founder Alex Mashinsky and others misappropriated more than ¥550 billion ($4 billion) in client assets. It also said it had lied about insuring client assets and concealed its financial status.

The FTC has fined Celsius about ¥650 billion ($4.7 billion). But it will also give Celsius a grace period so that it can return assets to its clients in bankruptcy proceedings.

Celsius stopped withdrawing client funds in June 2022 after 3 Arrows Capital (3AC) and others defaulted, citing “extreme market conditions.” In July, the company filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code.

Department of Justice Criminal Indictment

Mashinsky was also arrested and charged on the 13th. Mashinsky has pleaded not guilty by appearing in a New York district court.

Mashinsky is expected to be released on bail after his wives and others take steps to deposit about 5.5 billion yen ($40 million) with authorities as collateral in lieu of bail. His passport will be confiscated and he will be limited to New York.

The U.S. Department of Justice has accused Mashinsky of deceiving customers and manipulating the price of Celsius’ proprietary token, CEL, and former Celsius Chief Revenue Officer Roni Cohen Pavon, of manipulating the price of CEL. prosecuted.

According to the Department of Justice, in accordance with the intentions of Mashinsky and others, Celsius used customer funds to fund market purchases of CEL to support the price of CEL. This fact was not disclosed to the customer.

By artificially inflating the price of CEL, Mashinsky and others were able to sell their holdings of CEL for a large profit. According to the complaint, Mashinsky personally received approximately ¥5.8 billion (approximately $42 million) in proceeds from the sale of CEL.

Mashinsky and others face charges of securities fraud, commodity fraud, wire fraud and market manipulation, with up to 20 years in prison if convicted.

US SEC filing

The U.S. Securities and Exchange Commission (SEC) sued Celsius and Mashinsky for securities fraud and other violations.

He pointed out that Celsius had made false claims to investors, such as “We will not engage in unsecured loans or high-risk transactions.” He also enumerates the yield program being considered unregistered securities law, CEL price manipulation, and more.

The SEC is seeking a ban on Mashinsky from serving as an officer or director of a public company, civil penalties, and a waiver of unfair gains.

US CFTC claims

In addition, the U.S. Commodity Futures Trading Commission (CFTC) accused Celsius of fraud and material misrepresentation, including misrepresentation of high profits and safety, in order to win customers.

It also pointed out that Celsius was acting as a commodity pool operator (CPO), but it was unregistered and violated the Commodity Exchange Act. It seeks reparations, civil penalties and permanent trade and registration bans.

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