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Investigators from the United States Commodity Futures Trading Commission (CFTC) have concluded that Celsius and its former CEO, Alex Mashinsky broke several US laws.
It has emerged that if a majority of commissioners from the CFTC agree with the conclusion, then the regulator could file a case against Mashinsky in federal court later this month.
Mashinsky Broke Rules
The United States Commodity and Futures Trading Commission (CFTC) has announced the conclusion of its probe into Celsius Network. According to attorneys from the regulator’s enforcement unit, Celsius and Mashinsky deliberately misled investors and broke several of the country’s investment laws before the firm’s eventual collapse in 2022. The CFTC revelations come a year after Celsius had filed for Chapter 11 bankruptcy and left thousands of customers, creditors, and investors in the lurch.
The New York Attorney General had sued Mashinsky on the 5th of January, 2023, alleging that the former Celsius CEO had misled investors, resulting in losses of billions of dollars.
“I’m suing the former CEO of cryptocurrency platform @CelsiusNetwork for defrauding investors out of billions of dollars. Alex Mashinsky lied to people about the risks of investing in Celsius, hid its deteriorating financial condition, and failed to register in New York.”
The New York Attorney General stated at the time that Mashinsky had defrauded investors, including 26,000 residents of New York State, out of billions of dollars worth of crypto. She added that Mashinsky’s actions leading up to the Celsius bankruptcy led to significant investor losses as he misrepresented the platform’s financial condition.
“As the former CEO of Celsius, Alex Mashinsky promised to lead investors to financial freedom but led them down a path of financial ruin. “The law is clear that making false and unsubstantiated promises and misleading investors is illegal. Today, we are taking action on behalf of thousands of New Yorkers who were defrauded by Mr. Mashinsky to recoup their losses.”
CFTC Could File Lawsuit Against Celsius
According to reports, the Commodity and Futures Trading Commission attorneys believe that Celsius misled investors. They also added that the crypto lender should have registered itself with the CFTC. According to sources close to the matter, the CFTC could initiate the filing of a federal case against Celsius if a majority of its commissioners agree with the conclusion that the crypto lender misled investors and customers.
Court filings have also revealed that the bankrupt crypto lender was under scrutiny from several federal agencies. These include the United States Securities and Exchange Commission (SEC), The Washington Department of Financial Institutions Securities Division, and the Massachusetts Securities Division. As a result of these developments, the platform’s native CEL token has seen a 12% drop in value. Currently, the token is trading at $0.15.
Fahrenheit To Acquire Celsius Assets
Meanwhile, it was revealed last month that crypto consortium Fahrenheit won the bid to acquire Celsius Network’s assets after a successful bid. Fahrenheit beat fellow bidder NovaWulf, while the Blockchain Recovery Investment Consortium (BRIC) was shortlisted as a backup. Fahrenheit’s winning consortium was backed by mining company US Bitcoin Corp, Arrington Capital, Ravi Kaza, Steven Kokinos, and Proof Group. Court filings revealed that Celsius Network’s assets were previously valued at $2 billion. The successful bid will see Fahrenheit acquire Celsius’s institutional loan portfolio, staked cryptocurrencies, mining units, and additional alternative investments.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.