The Securities and Exchange Commission (SEC) of the United States has taken action against Celsius Network, a cryptocurrency lending firm that collapsed in 2022. According to a report by Bloomberg, the SEC filed a lawsuit against Celsius’ former CEO, Alex Mashinsky, on July 13. The details of the complaint were not immediately available.
In addition to the lawsuit, Mashinsky was reportedly arrested on the same day following an investigation into the company’s collapse. Anonymous sources familiar with the matter revealed this information. This development comes shortly after the Commodity Futures Trading Commission (CFTC) found that Celsius and Mashinsky had violated several U.S. regulations before the company’s implosion last year.
Attorneys from the CFTC’s enforcement division discovered that Celsius had misled investors and failed to register with the regulator. Mashinsky was found to have broken several U.S. regulations as well. These findings from the CFTC raise serious concerns about the conduct and compliance of Celsius Network and its former CEO.
The action taken by the SEC and the arrest of Mashinsky occurred on the same day that Celsius Network announced the initiation of voluntary Chapter 11 proceedings. According to the company, it currently has $167 million in cash on hand, which will be used to support certain operations during the restructuring process. While the exact reasons for the company’s collapse are not clear, the initiation of the Chapter 11 proceedings suggests financial difficulties and a need to stabilize the business.
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In response to the development, Mashinsky expressed optimism about the future of Celsius Network. He stated, “This is the right decision for our community and company. 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.”
It’s important to note that this situation is still developing, and further information will be added as it becomes available. However, this recent series of events involving Celsius Network highlights the need for stricter regulations and oversight in the cryptocurrency lending industry. This case serves as a reminder that investors need to exercise caution and conduct thorough due diligence before engaging with any cryptocurrency-related services.
This is not the first time Mashinsky has faced legal issues. In January 2023, he was sued by the New York Attorney General Letitia James. The complaint alleged that Mashinsky made numerous false and misleading statements, which led to significant financial losses for investors. These legal actions against Mashinsky further raise questions about his credibility and the actions of Celsius Network under his leadership.
Overall, the actions taken by the SEC and the CFTC, along with the initiation of Chapter 11 proceedings by Celsius Network, demonstrate the potential risks and challenges involved in the cryptocurrency lending industry. As the industry continues to evolve and gain mainstream attention, it is crucial for regulators to establish clear guidelines and enforce compliance to protect investors and maintain the integrity of the market.
