The legal troubles for Celsius founder Alex Mashinsky continue to escalate, as he has been arrested and charged with multiple counts of fraud by federal authorities. Mashinsky is facing seven criminal charges, including securities fraud, commodities fraud, and wire fraud. In addition to the criminal charges, Mashinsky and his company are facing lawsuits from three government agencies: the Federal Trade Commission (FTC), the Commodity Futures Trading Commission (CFTC), and the Securities and Exchange Commission (SEC). The U.S. Attorney’s Office has accused Mashinsky of deceiving customers about the true nature of Celsius, presenting it as a bank when it was actually a high-risk investment fund.
The former chief revenue officer of Celsius, Roni Cohen-Pavon, has also been arrested and charged with Mashinsky. The charges against them include manipulating the price of Celsius’s proprietary cryptocurrency token in order to sell their own stock at inflated prices.
According to federal prosecutors, Mashinsky misrepresented various aspects of Celsius’s operations, including the safety of its yield-generating activities, its profitability, the long-term sustainability of its high rewards rates, and the risks associated with depositing crypto assets with the company.
In addition to the criminal charges and lawsuits, the FTC has reached a $4.7 billion settlement with Celsius. This settlement is one of the largest fines ever imposed, comparable to the record fine imposed on Facebook for privacy violations. However, Celsius will only make the payments once it returns the remaining customer assets as part of the ongoing bankruptcy proceedings.
The legal troubles facing Celsius and its founder do not end there. A lawsuit filed in January in New York accuses Celsius of massive fraud, seeking damages for allegedly defrauding investors of billions of dollars in cryptocurrency.
While details of today’s arrest are limited, the New York lawsuit alleges that Mashinsky deceived customers about the deteriorating financial health of the company and failed to register as a commodities and securities dealer. New York State Attorney General Letitia James claims that Mashinsky defrauded hundreds of thousands of investors, with over 26,000 of them located in New York.
If convicted on all counts, Mashinsky and Pavon could face lengthy prison sentences. Although Mashinsky resigned as CEO of Celsius last year and is no longer involved with the company, the legal repercussions for him and his former colleague are significant.
It is important to note that the content provided is based on information available at the time of writing. However, as legal proceedings are ongoing, new developments may arise that could impact the outcome of the case.
In conclusion, the arrest and charges against Alex Mashinsky, the founder of Celsius, along with the lawsuits from government agencies and the massive settlement with the FTC, paint a grim picture for the company. The allegations of fraud and deception, if proven true, could have significant consequences for Mashinsky and his former colleagues. It remains to be seen how the legal proceedings will unfold and what the final outcome will be for Celsius and its founder.
