CRYPTO EARTHQUAKE: Celsius former CEO Alex Mashinsky was arrested!

Celsius co-founder and former CEO, Alex Mashinsky, has been arrested. Celsius was the cryptocurrency lending firm that went bankrupt in July last year

by Lorenzo Ciotti
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CRYPTO EARTHQUAKE: Celsius former CEO Alex Mashinsky was arrested!

Celsius co-founder and former CEO, Alex Mashinsky, has been arrested. Celsius was the cryptocurrency lending firm that went bankrupt in July last year. According to a US Department of Justice indictment, the man was arrested in New York along with other associates on seven counts, including securities fraud, wire fraud and conspiracy to manipulate the price of the Celsius cel token.

Much of Celsius's client assets are still frozen due to bankruptcy proceedings, although the company should be able to sell its altcoin holdings or convert them to bitcoin or ether by the end of the month. New York Attorney General Letitia James filed a lawsuit against Mashinsky, accusing him of misleading investors about the company's financial condition.

The SEC complaint claims that Celsius's CEL token and its Earn Interest Program are securities.

Celsius former CEO Alex Mashinsky has been arrested

The US Department of Justice explains in a statement: "Mashinsky presented Celsius as a modern bank, where customers could safely deposit cryptocurrencies and receive returns (up to 17%, ed.).

In reality, Mashinsky managed Celsius as a risky investment fund, taking clients' money under false and misleading pretexts." The US Department of Justice, the SEC, the Commodity Futures Trading Commission and the Federal Trade Commission have sued Celsius in federal court in Manhattan.

Earlier this month, the CFTC concluded an investigation, finding that Celsius and Mashinsky violated regulatory guidelines by providing investors with misleading information. Celsius had gained popularity by offering high interest rates on digital asset deposits.

The collapse of stablecoin TerraUSD and a decline in digital asset markets. On January 31, 2023, Shoba Pillay, a court-appointed examiner and a former federal prosecutor, filed a 470-page report on Celsius with the bankruptcy court.

Pillay's report, as interpreted by Molly White, described blatant fraud by Mashinsky during his time as CEO. The report was particularly critical of the weekly Ask Mashinsky Anything livestreams, which were later edited and published as videos on demand: "As described by the examiner, Mashinsky routinely knowingly and overtly lied to customers in these videos, to a point where the company instituted a whole process to remove false or substantially misleading statements made in the live videos before republishing the recordings.

The company made no attempt to inform their customers of the lies or the retractions, and in fact employees repeatedly expressed concern internally that if they made too many edits, customers or other viewers of the video who had watched live might notice the difference."

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