Former Celsius CEO Alex Mashinsky has reportedly been arrested

On the morning of July 13, Alex Mashinsky, the former CEO of Celsius, a now-bankrupt cryptocurrency lender, was reportedly arrested. This news broke minutes after the US Securities and Exchange Commission (SEC) filed a lawsuit against the company on the same day.

Accused of fraud and manipulation

According to sources familiar with the case, Bloomberg reported that Mashinsky was reportedly arrested following an investigation into the Celsius collapse. He was charged with fraud and market manipulation.

Celsius Network filed for bankruptcy on July 14 last year. Most recently, Mashinsky was found guilty by investigators from the Commodity Futures Trading Commission (CFTC), who concluded that he had broken numerous US rules before the company’s implosion in 2022.

The investigation into the former CEO began after the New York Attorney General indicted Mashinsky on Jan. 5. According to the indictment, he had misled investors and caused billions of dollars in losses.

Problems at Celsius

The troubles for Celsius and Mashinsky started in June last year, when the cryptocurrency lender suddenly halted withdrawals on the platform. On June 16, 2022, regulators from five different US states launched an investigation into Celsius, and within a month the platform filed for bankruptcy.

While Celsius was dealing with the broader crypto market downturn, including the implosion of the Terra-Luna ecosystem and the collapse of crypto hedge fund Three Arrow Capital, the CFTC’s investigation found that Celsius and Mashinsky had broken several banking laws and had misled and lied to their customers.

During the 2021 bull run, the Celsius cryptocurrency lending platform gained traction, in part due to the pandemic. The platform offered attractive interest rates on cryptocurrency deposits, some of which were even in the double digits. Mashinsky often promoted these products as safer alternatives to those offered by traditional banks. However, the demise of Terra’s algorithmic stablecoin UST and a collapse in the cryptocurrency market had devastating consequences for the company.

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