Former CEO of now-bankrupt cryptocurrency finance company Celsius, Alex Mashinsky, was reportedly arrested on the morning of July 13. The news comes minutes after the U.S. Securities and Exchange Commission filed a lawsuit against the cryptocurrency finance company the same day.
The former CEO was reportedly arrested following an investigation into the company’s bankruptcy. report Bloomberg reported this, citing people familiar with the matter. Mashinsky has reportedly been charged with fraud and intent to manipulate the market.
Celsius Network filed for bankruptcy on July 14 last year. Mashinsky was recently convicted by investigators at the Commodity Futures Trading Commission, which concluded that the former CEO violated numerous U.S. regulations before the company’s bankruptcy in 2022.
The investigation into the former CEO began after the New York Attorney General filed charges against Mr. Mashinsky on January 5. NYAG claimed the former CEO misled investors and caused billions of dollars in losses.
Celsius and its former CEO’s troubles began last June when the crypto lender abruptly stopped withdrawals on its platform. On June 16, 2022, securities regulators in his five states in the United States launched an investigation into Celsius, and within a month the platform filed for bankruptcy.
While Celsius has suffered a massive crypto contagion with the collapse of the Terra Luna ecosystem followed by the collapse of crypto hedge fund Three Arrow Capital, the CFTC investigation found that Celsius and its The former CEO was found to have violated several banking laws, misleading and lying to bank accounts. customer base.
The pandemic has helped the Celsius cryptocurrency lending platform gain momentum in a bull market in 2021. The platform offers attractive interest rates on crypto deposits, some of which have performed in his double digits. Mashinsky often marketed these products as safer alternatives to those offered by traditional banks. However, the demise of Terra’s algorithmic stablecoin UST and the downturn in the cryptocurrency market have had a devastating effect on business.
Mashinsky’s arrest and lawsuit against Celsius come within months of the SEC’s lawsuit against crypto exchanges Binance and Coinbase.
Celsius Network did not immediately respond to Cointelegraph’s request for comment.
This is a work in progress story and more information will be added as it becomes available.