Founder of Crypto Lender Celsius Network Arrested

Founder of Crypto Lender Celsius Network Arrested – Alexander Mashinsky, the individual who established and previously served as CEO of the cryptocurrency lending platform Celsius Network, was apprehended on Thursday on federal fraud allegations. The charges claim that he engaged in a scheme to deceive customers by providing false information about crucial aspects of the company.

An indictment, which was revealed in Manhattan federal court, accuses Alexander Mashinsky of committing securities, commodities, and wire fraud. Additionally, he is charged with unlawfully manipulating the value of Celsius’s unique cryptocurrency token while secretly selling his own tokens at inflated prices. At the time of writing, there has been no response from Mashinsky’s attorney regarding the matter.

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The indictment claims that Mashinsky, between 2018 and 2022, marketed Celsius to customers as a modern-day bank where they could securely deposit their cryptocurrency assets and earn interest. However, the indictment alleges that Mashinsky operated Celsius more like a high-risk investment fund, deceiving customers and exposing them to potential risks, contrary to his claims.

According to the indictment, Mashinsky promoted Celsius through various channels such as media interviews, his Twitter account, and Celsius’s website. Additionally, he conducted a weekly session called “Ask Mashinsky Anything,” which was broadcasted on Celsius’s website and YouTube channel. Despite warnings from Celsius employees in different departments who noticed false and misleading statements during these sessions, Mashinsky reportedly disregarded their concerns. 

The indictment states that Mashinsky’s misrepresentation of Celsius as a secure and safe institution resulted in a substantial increase in its customer base, attracting a large number of retail investors. By the fall of 2021, Celsius had allegedly become one of the world’s largest crypto platforms, supposedly holding around $25 billion in assets. 

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Furthermore, the Securities and Exchange Commission (SEC) filed a lawsuit against Mashinsky and Celsius, accusing them of misleading investors through unregistered and often fraudulent offers and sales of crypto asset securities. In January, New York Attorney General Letitia James initiated a lawsuit against Mashinsky in a state court located in Manhattan, alleging that he deceived a large number of investors.

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