Celsius and Ex-CEO Alex Mashinsky Reportedly Broke U.S. Rules
- CFTC investigators have reportedly concluded that Celsius mislead investors and failed to register with the regulator, while its former CEO Alex Mashinsky broke CFTC regulations.
- If the majority of CFTC commissioners agree with the investigators’ findings, the regulator could file a lawsuit against Celsius and its former CEO as early as this month.
Former Celsius CEO Alex Mashinsky on Centre Stage during day three of Web Summit, Lisbon, Portugal, 4 November 2021.Piaras Ó Mídheach/Web Summit via Sportsfile/Flickr
The U.S. Commodity Futures Trading Commission (CFTC) could soon file a lawsuit against bankrupt crypto lender Celsius and its former CEO Alex Mashinsky for misleading investors, Bloomberg reported on 6 July.
The publication cited people familiar with the mater, who said CFTC investigators had determined that the bankrupt crypto lender and its former CEO broke U.S. rules before the collapse of Celsius. According to the report, Celsius not only mislead investors but also failed to register with the regulator, while Mashinsky broke a number of CFTC regulations during his time as CEO.
The sources noted that if the majority of CFTC commissioners agree with the investigators’ findings, the regulator could file a lawsuit against the company and its former CEO as early as this month. While unconfirmed, the new CFTC findings add to a growing pile of regulatory actions against Celsius and Mashinsky.
New York Attorney General Letitia James already filed a lawsuit against Mashinsky on 5 January, accusing the former CEO of misleading and defrauding investors — 26,000 of which were New Yorkers — out of billions of dollars in crypto. At the end of the month, a court-ordered bankruptcy examiner found that Celsius made risky investment bets with customer funds, and that at times it operated in a manner similar to a Ponzi scheme.
The troubled crypto lender paused all withdrawals on its platform on 13 June last year citing “extreme market conditions”, and in the next month proceeded to reduce its debt to decentralized finance (DeFi) platforms Aave, Maker, and Compound. On 14 July 2022, the company officially filed for Chapter 11 bankruptcy protection, and since then has been the target of investigations from multiple U.S. regulators.
- A little over $13 million in altcoins were sent to crypto exchanges Binance and Coinbase in the past 24 hours, which is in accordance with a September court order.
- The court ordered a phased liquidation process, which allows the bankruptcy estate to sell $3.4 billion worth of digital assets over a certain period of time.
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- The bankrupt crypto lender said that if its reorganization plan is approved, it is ready to start repaying its customers using $2 billion in BTC and ETH by the end of the year.
- If given the green light, Celsius will restart its business under the “NewCo” brand without any funded debt, and with seed funding of up to $450 million.
- The U.S. Department of Justice has expressed its concerns over Sam Bankman-Fried’s seven expert witnesses, and requested they be barred from testifying on the case.
- The DoJ claimed most of the proposed experts lacked the necessary foundation for their opinions, making them unqualified to be an expert witness.