- Celsius Network agreed to settle the case with US FTC
- Alex Mashinsky was arrested by the SDNY Attorney’s Office on 13 July for defrauding investors
Celsius Network, formerly known as one of the most popular crypto lending platforms, is back in the limelight. The bankrupt entity has come under the radar of US regulatory authorities in the latest developments.
This includes the Federal Trade Commission (FTC) and the US Attorney’s Office of the Southern District of New York.
Bankrupt Celsius Network agrees to pay in billions
According to the press release issued by the FTC, the authority reached a settlement with Celsius Network. Meanwhile, it charged several executives of the firm for defrauding investors. As per the settlement deal, Celsius Network and its affiliate companies have been permanently banned from operating and providing services in the US.
Moreover, the company also agreed to pay a hefty penalty of $4.7 billion. However, this has been suspended in order to “permit Celsius to return its remaining assets to consumers in bankruptcy proceedings.”
Notably, this action from the regulatory authority comes nearly a year after the crypto lender declared bankruptcy. And, the latest bankruptcy filing saw the company make amends to its plan after Fahrenheit won the bid to acquire its assets.
The FTC has also brought about charges against the founders of the platform. The law enforcement agency stated that Alexander Mashinsky, Shlomi Daniel Leon, and Hanoch Nuke Goldstein – did not agree to settle the case. This has resulted in the FTC opening a case against the trio in federal court. The case against them is based on the following aspects,
“The FTC says the company and its top executives deceived users by falsely promising them that they could withdraw their deposits at any time, that the company maintained a $750 million insurance policy for deposits, that it had sufficient reserves to meet customer obligations, and that those in its Earn program could earn rewards on deposits of cryptocurrency assets […]”
Furthermore, the case also claimed that all three executives “protected themselves by withdrawing significant sums of cryptocurrency” from the platform two months prior to its collapse. Additionally, at the same time, these executives encouraged people to not withdraw from Celsius, resulting in several losing access to college funds and life savings.
SDNY swings into action against the crypto lender execs
Notably, FTC wasn’t the only one to go after the executives of the platform. The Attorney’s Office of the Southern District of New York also unveiled charges against Alexander Mashinsky and Roni Cohen-Pavon.
Mashinsky was charged on grounds of defrauding investors and Cohen-Pavon manipulated CEL prices in the markets. The SDNY took an extra step by arresting Maskinsky on 13 July and taking him to court, while Cohen-Pavon is currently outside the country.
Mashinsky defrauded investors by committing securities, commodities, and wire fraud. He was charged for the same. In addition, the charge is also for misleading them about facts related to Celsius’ profitability, success, and nature of investment.
Meanwhile, Cohen-Pavon faces the same charges but for manipulating the price of CEL by selling them at “artificially inflated prices.” The case read,
“MASHINSKY also repeatedly made false and misleading public statements concerning the nature of Celsius’s market activity and the extent to which Celsius itself was responsible for artificially supporting and inflating the price of CEL. In certain instances, MASHINSKY and other Celsius executives also personally purchased CEL for the purpose of artificially supporting CEL’s price.”
