Celsius Network Founder, Alex Mashinsky, Arrested and Charged with Fraud after Bankruptcy

Alex Mashinsky, the Founder of the crypto lending company Celsius, has recently faced a major setback as the firm filed for bankruptcy. However, the situation has taken a more serious turn as Mashinsky, along with Celsius’s Chief Revenue Officer Roni Cohen-Pavon and other employees, now faces arrest and multiple charges of fraud.

According to a court document filed on July 11, the accused individuals are alleged to have orchestrated two fraudulent schemes involving CEL, the native asset of Celsius, in order to deceive customers. Mashinsky, who established Celsius in 2018, is accused of misleading customers by presenting the company as a modern-day bank where they could earn interest on their crypto assets. Instead, it is claimed that Mashinsky engaged in risky trading activities with customers’ funds.

The document states, “Mashinsky operated Celsius as a risky investment fund, luring customers with false and deceptive claims, thereby transforming them into unsuspecting investors in a significantly riskier and less profitable business than Mashinsky had portrayed.”

Moreover, Mashinsky is accused of intentionally manipulating the price of CEL, leading the public to purchase the token at inflated prices. This manipulation allegedly served to benefit Mashinsky and Cohen-Pavon personally, as they secretly sold their own CEL at prices that did not accurately reflect its true market value.

The charges brought against the defendants include wire fraud, commodities fraud, securities fraud, and market manipulation. As if these legal challenges were not enough, Mashinsky is also facing a lawsuit from the U.S. Securities and Exchange Commission (SEC) on similar grounds. The SEC claims that Mashinsky deceived customers and raised billions of dollars through the offering of unregistered securities.

According to the regulatory agency, Mashinsky and his associates “falsely promised investors a secure investment with high returns through the ‘Earn Interest Program,’ misled them about Celsius’s financial success, and fraudulently manipulated the price of Celsius’s own cryptocurrency asset – the CEL token.”

The defendants’ alleged misconduct unraveled in June 2022, leaving investors unable to withdraw billions of dollars’ worth of crypto assets from Celsius’s online platform.

These recent developments have cast a dark shadow over Mashinsky and Celsius, raising serious concerns about the integrity of the company’s operations and its impact on customers. The legal proceedings and investigations surrounding Mashinsky and Celsius are ongoing, as authorities work to uncover the full extent of the alleged fraudulent activities.

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Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.

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