Following the fraud charges, Mashinsky was allegedly arrested.
Alex Mashinsky, ex-CEO of now insolvent crypto lender Celsius, is confronting criminal fraud charges, as disclosed by the United States Attorney for the Southern District of New York and the Federal Bureau of Investigation.
On July 13th, the US Justice Department released a formal statement noting that Mashinsky is accused of securities fraud, commodities fraud, and wire fraud. These charges stem from allegations of deceiving customers regarding Celsius' financial health, the nature of its investments, and its success.
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However, authorities have agreed not to prosecute Celsius directly, as it "accepted responsibility for its role in the fraudulent schemes."
The US Attorney, Damian Williams, issued a stern warning in response to these charges. He expressed the authorities' determination to take down anyone exploiting regular investors for personal gains, regardless of whether their deceit involves conventional methods or novel cryptocurrency frauds. He emphasized:
If you rip off ordinary investors to line your own pockets, we will hold you accountable. Whether it’s old-school fraud or some new-school crypto scheme, it doesn’t matter one bit. It’s all fraud to us. And we’ll be here to catch it.
Roni Cohen-Pavon, ex-chief revenue officer at Celsius, and Mashinsky face additional charges, including conspiracy, securities fraud, market manipulation, and wire fraud associated with Celsius (CEL) token price manipulation.
The allegations reveal that Mashinsky made an estimated $42 million from CEL sales through artificially inflated prices, with Cohen-Pavon reaping approximately $3.6 million.
On July 13th, law enforcement reportedly arrested Mashinsky over seven criminal charges. As Williams disclosed, these charges were initially put forward in November 2022, but the indictment remained concealed until now.
Simultaneously, the Commodity Futures Trading Commission lodged a complaint against Celsius and Mashinsky. Celsius allegedly had operated as an unregistered commodity pool operator, with Mashinsky as an unregistered associated person, constituting breaches of the Commodity Exchange Act.
These recent charges follow a series of legal actions against Celsius and Mashinsky in the wake of the platform's crash and financial complications in 2022.
Adding to Mashinsky's legal woes, the New York Attorney General’s office filed a lawsuit against him on January 5th, citing that his misleading actions towards Celsius investors led to billions of dollars in losses.
The litany of charges and allegations against Mashinsky and Celsius underscores the potentially high stakes of regulatory compliance in the ever-evolving crypto sector.