The former chief executive of the now-defunct crypto-lending platform, Celsius, Alex Mashinsky was reportedly taken into custody on July 13, following a lawsuit filed by the United States Securities and Exchange Commission against the company. The information came swiftly on the heels of the lawsuit and was confirmed by Bloomberg from reliable sources.
Mashinsky’s arrest was the consequence of an investigation triggered by the firm’s collapse. The digital currency firm filed for bankruptcy on July 14 last year. Before the company’s downfall in 2022, the U.S Department of Justice accused Mashinsky of fraud and market manipulation. Their conclusion mirrored that of Commodity Futures Trading Commission investigators, who found Mashinsky guilty of violating numerous U.S regulations.
The investigation kicked off when the New York Attorney General launched a lawsuit against Mashinsky on Jan. 5, accusing him of misleading investors resulting in billions of dollars in losses. This conflict was set in motion in June of the previous year when Celsius halted withdrawals on its platform and soon found itself under investigation by securities regulators from five U.S states.
Celsius, along with its former CEO, fell prey to a larger crypto cataclysm that also saw the disintegration of the Terra-Luna ecosystem and the fall of the crypto hedge fund, Three Arrow Capital. Surging to popularity in 2021 during the bull run, Celsius offered lucrative interest rates on crypto deposits, several boasting double-digit figures. These offerings were frequently advertised by Mashinsky as safer substitutes for conventional banking services. This arrest and lawsuit against Celsius comes on the back of SEC’s lawsuits against renowned crypto exchanges Binance and Coinbase in recent months.