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.
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.
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.