“Former Celsius CEO Alex Mashinsky Reportedly Detained Following SEC Lawsuit and Crypto Lender’s Bankruptcy”
In a recent turn of events, Alex Mashinsky, the former CEO of the now-defunct cryptocurrency lender Celsius, has allegedly been arrested on the morning of July 13. This development occurred shortly after the United States Securities and Exchange Commission (SEC) filed a lawsuit against Celsius on the same day.
According to insiders cited by Bloomberg, Mashinsky’s arrest stems from an investigation into the collapse of Celsius. The US Department of Justice has reportedly indicted him on charges related to fraud and market manipulation.
Celsius Network filed for bankruptcy on July 14 last year. Investigations conducted by the Commodity Futures Trading Commission (CFTC) found Mashinsky guilty of multiple violations of US regulations leading up to the company’s downfall in 2022.
The legal troubles for Mashinsky began when the New York Attorney General sued him on January 5, alleging that he misled investors and caused significant financial losses.
Celsius encountered difficulties in June of the previous year when it suddenly halted withdrawals on its platform. Subsequently, securities regulators from five US states launched an investigation into the company on June 16, 2022, and within a month, Celsius filed for bankruptcy.
While Celsius suffered from the broader turmoil in the crypto market, including the collapse of the Terra-Luna ecosystem and Three Arrow Capital, the CFTC’s investigation revealed that the company and its former CEO violated numerous banking laws and misled customers.
In 2021, during the cryptocurrency bull run, the Celsius cryptocurrency lending platform gained popularity by offering attractive interest rates on crypto deposits, some even in double digits. Mashinsky positioned these products as safer alternatives to traditional banking offerings. However, the downfall of Terra’s UST stablecoin and the subsequent cryptocurrency market slump severely impacted the business.
Mashinsky’s arrest and the lawsuit against Celsius come not long after the SEC’s legal actions against major crypto exchanges Binance and Coinbase.