Celsius And Founder Alex Mashinsky Defrauded Investors Of Billions, SEC Filed In Manhattan

  • The New York Attorney General and the CFTC accused Alex Mashinsky’s Celsius of rule-breaking. ‘
  • A court-appointed examiner said the trouble crypto firm operated similarly to a pyramid scheme.
  • Court documents also show that CEO Alex Mashinsky and other executives withdrew millions from the company leading up to the crash in 2022.
  • The SEC is on a marauding crackdown with lawsuits against other entities like Binance and Coinbase.

Bankrupt crypto firm Celsius and founder Alex Mashinsky are being sued by the U.S. Securities and Exchange Commission (SEC), per Bloomberg.

The SEC’s complaint alleges that Mashinsky deceived investors about the company’s finances and used unregistered crypto asset securities to raise billions of dollars. Federal prosecutors claimed that Celsius manipulated the price of its own native token CEL.

Mashinsky, who Justice Department prosecutors say was the architect of intricately organized fraud, faces criminal charges on seven counts in Southern District of New York court.

Thursday’s filing in Manhattan follows a flurry of lawsuits from federal regulators against crypto businesses and operations in the U.S. The SEC recently sued two crypto’s largest exchanges – Binance and Coinase.

Regulators Sue Celsius

New York Attorney General Letitia James accused Mashinsky and his company of fraud. In January, an independent court-appointed examiner reported that the crypto lender operated like a Ponzi scheme.

The U.S. Commodity Futures Trading Commission (CFTC) also told a court tha that Celsius’s founder and the bankrupt crypto company broke commodities rules. Mashinsky insisted that the products his firm offered were neither securities nor commodities.

Mashinsky’s Risky Bets

Celsius once boasted $30 billion in assets before the crypto lender imploded last year. The examiner’s report said Mashinsky’s company made dangerous investments using customer funds as capital.

Mashinsky resigned in September months after Celsius filed for Chapter 11 protection last July and the company currently owes billions in crypto to investors, court documents show.

Mashinsky’s company lists among high-profile collapses from 2022 alongside firms like Do Kwon’s Terraform Labs, and Three Arrows Capital, the failed crypto hedge fund founded by Su Zhu and Kyle Davies.