Details on Federal Charges Brought Against the Founder of Celsius, Alex Mashinsky

Alex Mashinsky, the former CEO of the now-bankrupt crypto lending platform Celsius Network, was taken into custody today by the U.S. Department of Justice. He is currently facing seven criminal charges.

Michael A. Brodack, who leads the Criminal Division of the New York Field Office, announced at a press briefing held on Thursday that Mashinsky, aged 57, is believed to have gained over $40 million from alleged price manipulation of Celsius’ native digital currency, CEL. Brodack claimed that Mashinsky then pocketed these profits. The officer added a warning, saying, “When something seems too good to be true, it likely is.”

Cases such as this, which allege fraudulent activities in the crypto market, might seem complex. However, the message we want to convey today is simple: we will hold you accountable if you defraud ordinary investors for personal gain.

Additionally, allegations have been made against the former Chief Revenue Officer of Celsius, Roni Cohen-Pavon, aged 36. He is suspected to have gained around $3.6 million.

Celsius founder and former Chief Revenue Officer charged in connection with multibillion-dollar fraud and market manipulation schemeshttps://t.co/zyUODJAqk5

— US Attorney SDNY (@SDNYnews) July 13, 2023

Mashinsky was indicted on Thursday with several federal charges including securities fraud, commodities fraud, and two counts of wire fraud. Additionally, he is facing charges for conspiracy to manipulate CEL’s price, fraudulent schemes related to CEL price manipulation, and overall market manipulation of CEL. Four criminal charges, including conspiracy to commit securities fraud, market manipulation, and wire fraud, were filed against Cohen-Pavon.

In response to these events, U.S. Attorney Damian Williams commented, “Cases such as this, which allege fraudulent activities in the crypto market, might seem complex. However, the message we want to convey today is simple: we will hold you accountable if you defraud ordinary investors for personal gain.”

Celsius Declares Bankrupcy

Celsius Network, a cryptocurrency lending platform, had promised its users sizable returns and positioned itself as a safe choice. However, it put a halt to user withdrawals in June due to “extreme market conditions”. In the following month, it filed for bankruptcy as it was unable to cover its liabilities which exceeded its assets by $1.2 billion.

Celsius Network was among several cryptocurrency firms that became insolvent last year after Bitcoin‘s price experienced a significant dip. This downward trend in Bitcoin’s price led to financial difficulties for many such firms, ultimately leading to their downfall.

At its peak, Celsius Network was noted by the DOJ indictment on Thursday as one of the largest crypto platforms globally, boasting “approximately $25 billion in assets.” However, the indictment also mentioned that Mashinsky’s representation of Celsius as a “modern day bank” misled investors. The indictment alleges that his firm indulged in “risky trading practices,” despite the impression of security it presented.

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