The SEC sued the bankrupt crypto lender Celsius and its founder Alex Mashinsky
U.S. Securities and Exchange Commission said on Thursday it has filed a lawsuit against Celsius founder and CEO Alex Mashinsky Thursday, alleging he raised billions of dollars from investors through “unregistered and fraudulent” sales of crypto asset securities. Alex Mashinsky, the former CEO of cryptocurrency exchange Celsius Network, was arrested this morning, according to Bloomberg.
The SEC also alleges that Alex Mashinsky and Celsius “fraudulently manipulated” the price of Celsius’ native CEL token. The lawsuit adds to a series of challenges for the firm, which earlier this year was also sued by New York’s attorney general. The crypto industry has been on shaky ground after the SEC sued major crypto exchanges Binance and Coinbase Global last month raised risks of further regulatory challenges for the sector.
“Celsius filed for bankruptcy last July after freezing customer withdrawals and transfers amid a decline in the value of major cryptocurrencies, including bitcoin,”
Mashinsky stepped down from his position as CEO in September 2022. His arrest and the SEC’s lawsuit represent the latest developments in a saga that continues to send shockwaves through the crypto industry.
According to the US watchdog, “misrepresented Celsius’s central business model and the risks to investors by claiming that Celsius did not make uncollateralized loans, the company did not engage in risky trading, and the interest paid to investors represented 80% of the company’s revenue.”
What Is Celsius (CEL)?
Celsius (CEL) is an all-in-one banking and financial services platform for cryptocurrency users. Launched in June 2018, it offers rewards for depositing cryptocurrency, along with services such as loans and wallet-style payments.
Users of the platform receive regular payouts and interest on their holdings. Celsius’ native token, CEL, performs a variety of internal functions, including boosting user payouts if used as the payment currency.
