Key takeaways:
- Alexander Mashinsky, the founder and former CEO of Celsius Network, is accused of securities, commodities, and wire fraud, as well as various securities manipulation and fraud.
- Mashinsky is accused of misleading customers about key aspects of the business from 2018 to 2022, including falsely claiming that Celsius was a modern-day bank.
- The $4.7 billion settlement with the FTC is one of the largest in the agency’s history, and is a sign that the government is taking a hard line against crypto-related fraud.
A former CEO of the now-bankrupt cryptocurrency lending platform Celsius Network was arrested on Thursday on federal fraud charges, according to a source.
Alexander Mashinsky, the founder and former CEO of Celsius Network, is accused of securities, commodities, and wire fraud, as well as various securities manipulation and fraud. The charges come as the company agreed to pay a $4.7 billion settlement with government regulators.
The Federal Trade Commission (FTC) alleged that Mashinsky misled customers about key aspects of the business from 2018 to 2022, including falsely claiming that Celsius was a modern-day bank where customers could safely deposit crypto assets and earn interest. He is also accused of illegally manipulating the price of Celsius’s proprietary crypto token while secretly selling his own tokens at inflated prices.
The $4.7 billion settlement is one of the largest in the FTC’s history, close to the record $5 billion fine levied against Meta in 2019. The FTC said the settlement highlights repeated deceptions by Celsius and Mashinsky.
The indictment against Mashinsky comes as the cryptocurrency industry faces increased scrutiny from regulators. The SEC and other agencies have been cracking down on fraudulent activities in the sector, and the FTC’s settlement with Celsius is a sign that the government is taking a hard line against crypto-related fraud.
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