Former Celsius CEO Mashinsky Found in Violation of Multiple US Rules by CFTC

1 min read

Former Celsius CEO Mashinsky Found in Violation of Multiple US Rules by CFTC

The United States Commodity Futures Trading Commission (CFTC) has determined that Celsius and its former CEO, Alex Mashinsky, have breached several US regulations. Pending agreement from a majority of CFTC commissioners, the regulatory body may proceed to file a case against Mashinsky in federal court later this month.

Mashinsky’s Rule Violations

The CFTC has announced the conclusion of its investigation into Celsius Network, stating that Celsius and Mashinsky intentionally deceived investors and violated numerous investment laws in the United States, which ultimately led to the company’s collapse in 2022. This revelation comes a year after Celsius filed for Chapter 11 bankruptcy, leaving numerous customers, creditors, and investors in a difficult situation.

On January 5, 2023, the New York Attorney General filed a lawsuit against Mashinsky, alleging that he had misled investors, resulting in losses amounting to billions of dollars. The Attorney General’s statement at the time accused Mashinsky of defrauding investors, including 26,000 residents of New York State, by concealing Celsius’s deteriorating financial condition and misrepresenting the risks associated with investing in the platform.

The Attorney General emphasized that Mashinsky, as the former CEO of Celsius, had promised investors financial freedom but instead led them to financial ruin. The lawsuit aimed to hold him accountable for his false promises and misleading actions, seeking to recover the losses incurred by thousands of defrauded New Yorkers.

CFTC Lawsuit Potential Against Celsius

Reports indicate that attorneys from the CFTC believe Celsius misled investors and failed to register with the regulatory body, which it should have done. If the majority of CFTC commissioners concur with this conclusion, the CFTC may proceed with a federal case against Celsius, alleging that the company deceived its investors and customers.

Court filings have also revealed that Celsius faced scrutiny from multiple federal agencies, including the United States Securities and Exchange Commission (SEC), the Washington Department of Financial Institutions Securities Division, and the Massachusetts Securities Division. As a consequence, Celsius’s native CEL token has experienced a 12% decline in value, currently trading at $0.15.

Fahrenheit’s Acquisition of Celsius Assets

In recent news, crypto consortium Fahrenheit emerged as the winning bidder to acquire Celsius Network’s assets. Fahrenheit prevailed over rival bidder NovaWulf, while the Blockchain Recovery Investment Consortium (BRIC) stood as a backup option.

Mining companies US Bitcoin Corp, Arrington Capital, Ravi Kaza, Steven Kokinos, and Proof Group provided backing for Fahrenheit’s successful consortium. Court filings disclosed that Celsius Network’s assets were previously valued at $2 billion. As part of the deal, Fahrenheit will acquire Celsius’s institutional loan portfolio, staked cryptocurrencies, mining units, and additional alternative investments.