Celsius Ex CEO Faces Fraud Charges

Alex Mashinsky, the former CEO of bankrupt crypto lender Celsius, faces fraud charges from the US Attorney for the Southern District of New York and the FBI.

The U.S. Justice Department charged Mashinsky with securities fraud, commodities fraud, and wire fraud on July 13 for allegedly defrauding customers and misrepresenting Celsius’ “success, profitability, and the nature of the investments” made with user funds.

Celsius “agreed to accept responsibility for its role in the fraudulent schemes” in a “non-prosecution agreement” with authorities. “If you rip off ordinary investors to line your own pockets, we will hold you accountable,” said U.S.

Attorney Damian Williams. “It doesn’t matter if it’s old-school fraud or some new-school crypto scheme. We call it fraud. We’ll capture it.” Roni Cohen-Pavon, former Celsius chief revenue officer, and Mashinsky will also face conspiracy, securities fraud, market manipulation, and wire fraud charges for manipulating the Celsius token price.

Mashinsky made $42 million by artificially raising CEL prices, while Cohen-Pavon made $3.6 million. New York resident Mashinsky was detained on July 13 for the seven-count indictment. Israel’s Cohen-Pavon faces four counts.

U.S. Attorney Damian Williams addressing reporters on July 13

Williams said the indictment was filed in November 2022 but sealed until today. The criminal accusations followed the July 13 Commodity Futures Trading Commission lawsuit against Celsius and Mashinsky.

According to the commission, Celsius and Mashinsky violated the Commodity Exchange Act by operating commodity pools without registration. After the platform collapsed with financial problems in 2022, Celsius and Mashinsky faced numerous legal actions.

Celsius banned withdrawals, and various U.S. state securities regulators investigated the firm. On Jan. 5, the New York Attorney General’s office sued Mashinsky, saying that the former CEO misled Celsius investors, costing billions of dollars.

On July 13, the SEC filed a similar civil claim against Celsius and Mashinsky. Celsius received a $4.7-billion FTC penalty.