A market meltdown sent shockwaves through the crypto world when Alex Mashinsky, the co-founder and former CEO of the now-bankrupt cryptocurrency lender Celsius Network, faced charges of defrauding investors and causing them to lose billions of dollars. In a press release, New York State Attorney General Letitia James accused Mashinsky of making false and misleading statements about the company’s safety as a way of luring investors to put millions of dollars worth of digital assets on the loan platform.
Mashinsky Accused of Violating CFTC Rules
The story has become more intricate as the CFTC’s findings revealed that Celsius misled investors and operated without proper registration. Furthermore, reports indicate that Mashinsky violated several of the CFTC’s rules. According to sources familiar with the matter, the majority of the CFTC commissioners could agree with the investigators’ findings. If that occurs, the agency might file a case against the bankrupt crypto lender in federal court this month.
The New York Attorney General’s Office investigated Celsius’ sudden user withdrawal freeze on June 13, last year. The SEC and federal prosecutors initiated probes into Celsius, investigating potential investor deception and violations of securities laws. CFTC investigators’ findings intensify the seriousness of the situation for Mashinsky and Celsius.
Seeking Return of Proceeds, Damages, and Restitution for Investors
Attorney General Letitia James alleged that Celsius investments were not the safe, low-risk investments Mashinsky portrayed to investors. Despite the CEO’s claims of investing in credible entities, the company actually exposed assets to high-risk counterparties and strategies. Mashinsky’s actions risked investors’ money and made it difficult for them to recoup losses due to platform failure.
The complaint aims to ban Mashinsky from business and permanently bar him from director or officer roles in New York. Now, thanks to Mashinsky’s actions, he has been left unable to pay his mortgage or cover basic living expenses. The Attorney General is seeking the return of proceeds, damages, and restitution for investors who trusted Mashinsky. The complaint seeks to ban Mashinsky from future business and permanently bar him from serving as a director in NY.
CFTC Findings Reveal Multiple U.S. Rule Violations by Celsius
Mashinsky’s current situation sharply contrasts with the previous financial success he achieved with Celsius before its bankruptcy. Speaking of the investigation and the subsequent charges, the AG said, “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.”
The charges against the former Celsius CEO have been compounded by the CFTC’s finding of multiple U.S. rule violations. Ongoing SEC and federal probes into the crashed crypto lender indicate a bleak outlook for Mashinsky and Celsius. Regulatory bodies’ close monitoring suggests that the drama surrounding Mashinsky and Celsius will eventually find a resolution. The outcome is likely to bring relief to the investors who trusted the now-bankrupt company.
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