The United States Securities and Exchange Commission (SEC) has taken legal action against Celsius Network, a cryptocurrency lending firm that experienced a collapse in 2022. On July 13, the SEC filed a lawsuit against Celsius’ former CEO, Alex Mashinsky, accusing him and the company of raising “billions of dollars” through unregistered and fraudulent offers, as well as selling “crypto asset securities.”
According to the complaint, the SEC alleges that Mashinsky made false promises to investors regarding the safety of their investments through the company’s lending service known as the “Earn Interest Program.” Furthermore, the SEC claims that Celsius and Mashinsky manipulated the price of their own crypto asset security, the Celsius (CEL) token, in a fraudulent manner.
The SEC specifically accuses Celsius and Mashinsky of misrepresenting significant financial events and the financial condition of the company. These misrepresentations are said to have occurred from the beginning of the CEL initial coin offering in March 2018 until just before Celsius halted customer withdrawals from its platform.
In a parallel development, Mashinsky was reportedly arrested on the same day as the SEC’s action following an investigation into the collapse of Celsius. This action by the SEC comes shortly after the Commodity Futures Trading Commission (CFTC) found that Celsius and Mashinsky had violated several U.S. regulations prior to the company’s implosion in the previous year. Bloomberg also reported that the CFTC’s enforcement division discovered that Celsius misled investors and failed to register with the regulator, with Mashinsky being implicated in multiple U.S. regulatory breaches.
Coinciding with these legal proceedings, Celsius officially announced the initiation of voluntary Chapter 11 proceedings. The company stated that it has $167 million in cash on hand, which will be used to support certain operations during the restructuring process.
Alex Mashinsky has previously been sued by New York Attorney General Letitia James in January 2023. The lawsuit alleged that Mashinsky made numerous false and misleading statements leading to investors losing billions.
Mashinsky responded to the recent developments by expressing confidence in Celsius’ ability to navigate through the current challenges. He believes that the actions taken by the company’s strong and experienced team will serve the community and strengthen the future of the company.
It should be noted that this lawsuit and the arrest of Mashinsky mark a significant moment in Celsius’ history, with potential implications for the broader crypto industry. By collecting this article as an NFT, you can preserve this historic moment and show your support for independent journalism in the crypto space.
In conclusion, the SEC’s lawsuit against Celsius and its former CEO, Alex Mashinsky, highlights allegations of fraudulent and unregistered activities. The legal action comes in the wake of previous findings by the CFTC and a voluntary Chapter 11 filing by Celsius. The outcome of these proceedings will have far-reaching implications for not only Celsius but also the crypto industry as a whole.
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