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.”
It then filed for bankruptcy a month later, with papers showing its liabilities outweigh its assets by $1.2 billion.
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.
