The U.S. Department of Justice today arrested former CEO of bankrupt crypto lender Celsius Network Alex Mashinsky and filed seven criminal charges against him.
At a Thursday press conference, Michael A. Brodack, special agent in charge of the Criminal Division of the New York Field Office, said that 57-year-old Mashinsky earned more than $40 million after allegedly manipulating the price of CEL, Celsius’ native digital asset, and pocketing the returns.
Brodack added: “When something seems too good to be true, it probably is.”
He alleged that Celsius former chief revenue officer, Roni Cohen-Pavon, 36, received about $3.6 million.
The feds in a Thursday indictment charged Mashinksky with securities fraud; commodities fraud; two counts of wire fraud; conspiracy to manipulate the price of the Celsius native token CEL; fraudulent scheme to manipulate the price of CEL; and market manipulation of CEL.
They hit Cohen-Pavon, with four criminal counts, including conspiracy to commit securities fraud, market manipulation, and wire fraud.
U.S. Attorney Damian Williams said in a Thursday statement: “This case, like the others my office has recently announced alleging fraud in the crypto economy, may appear complicated.
“But the message we send today is quite simple: If you rip off ordinary investors to line your own pockets, we will hold you accountable.”
Celsius was a crypto lender that promised huge returns to its customers and claimed to be “safe.” But it stopped user withdrawals last June due to “extreme market conditions.”
Celsius is one of a number of crypto companies that went bust last year after Bitcoin’s price dropped. When the price of the largest cryptocurrency by market cap started to dip, a number of firms started to struggle.
Many then went bust completely.
Celsius founder and former Chief Revenue Officer charged in connection with multibillion-dollar fraud and market manipulation schemeshttps://t.co/zyUODJAqk5
— US Attorney SDNY (@SDNYnews) July 13, 2023
Celsius, at its peak, was one of the biggest crypto platforms in the world, Thursday’s DOJ indictment noted—and held “approximately $25 billion in assets.”
But despite Mashinsky portraying that Celsius was a “modern day bank,” he misled investors and his firm engaged in “risky trading practices,” Thursday’s indictment alleged.
Editor’s Note: This story has been updated to include confirmation of Mashinsky’s arrest.