Alex Machinsky, the founder of bankrupt crypto lender Celsius, has been arrested and charged with multiple counts of fraud.
In a new court document filed on July 11, Mashinksy, alongside Celsius’s chief revenue officer Roni Cohen-Pavon and other employees of the firm, are accused of perpetrating two schemes involving CEL, the native asset of the crypto broker, to defraud customers.
Mashinsky, who founded Celsius in 2018, is accused of misleading customers into believing that the company would operate as a “modern-day bank” where customers can earn interest on deposited crypto assets but instead made risky trades with their funds.
“Mashinsky operated Celsius as a risky investment fund, taking in customer money under false and misleading pretenses and turning customers into unwitting investors in a business far riskier and far less profitable than what Mashinksy had represented.”
Furthermore, Mashinksy allegedly purposely manipulated the price of CEL, which caused the public to purchase it at an inflated price, greatly benefiting the defendants.
“In the second scheme, Mashinksy Cohen-Pavon, and other Celsius employees illicitly manipulated the price of CEL, thereby causing the public to purchase CEL at inflated prices, which personally benefited Mashinksy and Cohen-Pavon because they were secretly selling their own CEL at prices that they knew did not reflect the token’s true market value.”
The defendants’ charges include wire fraud, commodities fraud, securities fraud, and market manipulation.
Adding to his troubles, Mashinksy is also being sued by the U.S. Securities and Exchange Commission (SEC) for similar reasons. According to the regulatory agency, Mashinksy raised billions of dollars by lying to customers and offering unregistered securities.
“Defendants falsely promised investors a safe investment with high returns through its ‘Earn Interest Program,’ they misled investors about the financial success of Celsius’s business, and they fraudulently manipulated the price of Celsius’s own crypto asset security – the so-called “CEL” token.
Defendants’ scheme unraveled in June 2022, leaving investors unable to withdraw billions of dollars in crypto assets from Celsius’s online platform.”
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Source: https://dailyhodl.com/2023/07/13/founder-of-bankrupt-crypto-lender-celsius-network-alex-mashinsky-arrested-and-charged-with-fraud/