On 13 July, US law enforcement authorities detained former Celsius chief executive Alex Mashinsky, according to anonymous sources cited by Bloomberg.
According to court filings seen by insiders, the U.S. Securities and Exchange Commission (SEC) filed a suit against the company and its former chief executive. The publication says the case is sealed.
The regulator accuses Celsius of raising funds through fraudulent and unregistered sales of “cryptocurrency securities,” repeatedly deceiving investors about its financial position and manipulating the price of the native CEL token.
Earlier reports indicated that the U.S. Commodity Futures Trading Commission was preparing to file suit against the platform. Agency lawyers concluded that the company and Mashinsky misled investors and engaged in financial activity without a license.
In early 2023, the New York Attorney General’s office accused the Celsius CEO of deceiving investors by billions of dollars.
Analysts at Lookonchain noted that in February the former chief executive sold almost all of his CEL holdings for $48,000 through Coinbase.
In June 2022 Celsius paused withdrawals, exchange and transfers between accounts “due to extreme market conditions.”
After filing for bankruptcy with Celsius, the company reported a “deficit” in its balance sheet of $1.2 billion. In August it emerged that the company’s liabilities exceeded its assets by $2.85 billion.
In September, the platform’s chief executive Alex Mashinsky stepped down from the post of chief executive.
As noted earlier, in March 2023 the creditors’ committee of the crypto-lending platform согласился with NovaWulf Digital Management’s proposal to settle the debt. It is envisaged that clients with deposits under $5,000 will recover 70% of their funds.
In July Celsius proposed to convert creditors’ funds into Bitcoin and Ethereum.