Former Celsius CEO Alex Mashinsky Arrested in the US

Alex Mashinsky
  • The capture is part of an investigation into the Celsius collapse, according to reports
  • The SEC, CFTC and another agency filed lawsuits against Mashinsky and Celsius for fraud 
  • Celsius filed for bankruptcy in July 2022

Alex Mashinsky, the co-founder and former CEO of bankrupt cryptocurrency lender Celsius, was arrested Thursday morning in the United States, Bloomberg reported.

According to the report, citing a person familiar with the matter, the capture took place after an investigation by authorities in the US into the company’s collapse. The publication says that the criminal case is not public for now.

Additionally, it is reported that the Securities and Exchange Commission (SEC) would have filed a lawsuit against Celsius and Mashinsky himself. Regulators accused the former CEO of securities fraud, according to the report.

The SEC’s complaint alleges that Celsius’ CEL token and its Earn program are securities. “ In this case, Celsius offered and sold CEL and the Earn Interest Program as securities… Celsius and Mashinsky never filed a registration statement or had one in effect with the SEC for their securities offerings and sales,” the lawsuit cited by CoinDesk says.

Lawsuits from the Commodity Futures Trading Commission (CFTC) and the Federal Trade Commission (FTC), an independent agency of the US government, immediately followed.

The case of Celsius and Mashinsky

Celsius and its former director have been under scrutiny since the company went bankrupt last year. A previous Bloomberg report published last week already anticipated that the CFTC could file a case against Celsius and Mashinsky after concluding in an investigation that both broke the law before the firm’s collapse.

Once a popular cryptocurrency lending platform, Celsius filed for bankruptcy in July 2022, a month after completely freezing customer deposits citing “extreme market conditions.”

Based in New Jersey, the company allowed users to deposit cash and earn returns on their digital assets. In its heyday, it had as much as $25 billion in assets under management. After his bankruptcy, he left billions of dollars in debt to his investors. 

A previous report by an independent US court-appointed examiner found that Celsius operated in a manner similar to a Ponzi scheme when it used funds from new clients to pay for the withdrawals of others.

Mashinsky, who stepped down as Celsius director in September 2022 and has denied any responsibility for the company’s collapse, is already facing fraud charges in New York. 

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