US Securities and Exchange Commission Launches Legal Action Against Celsius and Founder Alex Mashinsky

The United States Securities and Exchange Commission (SEC) has initiated legal proceedings against Celsius Network, a cryptocurrency lending company that faced collapse in 2022.

On July 13, the SEC filed a lawsuit targeting Alex Mashinsky, the former CEO of Celsius, and the company itself. The lawsuit alleges that Celsius and Mashinsky engaged in unregistered and fraudulent activities, raising billions of dollars through deceitful offers and selling crypto asset securities.

The complaint lodged by the SEC asserts that Mashinsky made false assurances to investors regarding the safety of their investments through Celsius’ “Earn Interest Program,” a lending service. Additionally, the regulator claims that Celsius and Mashinsky manipulated the price of the Celsius token, their own crypto asset security, in a fraudulent manner.

According to the SEC, Celsius and Mashinsky misrepresented crucial financial events and the overall financial state of the company to the public. This misrepresentation reportedly began with the initial coin offering (ICO) of CEL tokens in March 2018 and continued until just before Celsius suspended customer withdrawals from its platform.

In connection with the legal action, Mashinsky was reportedly arrested on the morning of July 13 as part of an investigation into the collapse of the company.

The SEC’s lawsuit follows a recent report by the Commodity Futures Trading Commission (CFTC), which found that Celsius and Mashinsky had violated several U.S. regulations prior to the company’s downfall last year.

On July 6, Bloomberg revealed that the CFTC’s enforcement division had determined that Celsius misled investors and failed to register with the regulator, while Mashinsky himself had contravened multiple U.S. regulations.

Significantly, the SEC’s lawsuit coincided with Celsius officially announcing its decision to commence voluntary Chapter 11 proceedings. The company disclosed that it currently holds $167 million in cash, which will be utilized to support specific operations throughout the restructuring process.

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