Founder of failed crypto lending platform Celsius Network arrested on fraud charges
The founder and former CEO of the failed cryptocurrency lending platform Celsius Network was arrested Thursday on federal fraud costs alleging that he schemed to defraud prospects by deceptive them about key features of the business.
Alexander Mashinsky, 57, of Manhattan, was charged with securities, commodities and wire fraud in an indictment unsealed in Manhattan federal court docket. He was additionally charged with illegally manipulating the worth of Celsius’s proprietary crypto token whereas secretly promoting his personal tokens at inflated costs.
Jonathan Ohring, an lawyer for Mashinsky, mentioned in an e mail that his shopper “vehemently denies the allegations brought today.”
“He looks forward to vigorously defending himself in court against these baseless charges,” Ohring added.
According to the indictment, Mashinsky from 2018 to 2022 pitched Celsius to prospects as a modern-day financial institution the place they may safely deposit crypto property and earn curiosity. But. it mentioned, Mashinsky operated Celsius like a dangerous funding fund, taking in buyer cash underneath false and deceptive pretenses and exposing prospects to a high-risk business.
The indictment alleged that Mashinsky promoted Celsius by way of media interviews, his Twitter account and Celsius’s web site, together with a weekly “Ask Mashinsky Anything” session broadcast posted to Celsius’s web site and a YouTube channel.
Celsius workers from a number of departments who observed false and deceptive statements within the periods warned Mashinsky, however they have been ignored, the indictment mentioned.
Mashinsky’s false portrayal of Celsius as a secure and safe establishment prompted its buyer base to develop exponentially by way of a lot of retail traders, the indictment mentioned.
By the autumn of 2021, Celsius had grow to be one of many largest crypto platforms on the earth, purportedly holding roughly US$25 billion in property, it mentioned.
U.S. Attorney Damian Williams mentioned the arrest of Mashinsky was additional proof that his workplace will search to carry accountable those that attempt to cheat bizarre traders.
“Whether it’s old-school fraud or some new-school crypto scheme, it doesn’t matter one bit. It’s all fraud to us. And we’ll be here to catch it,” he mentioned.
The Securities and Exchange Commission on Thursday additionally sued Mashinsky and Celsius, saying they misled traders by way of unregistered and sometimes fraudulent presents and gross sales of crypto asset securities.
In January, New York Attorney General Letitia James sued Mashinsky in state court docket in Manhattan, saying he misled lots of of hundreds of traders.
Celsius filed for chapter final yr.
