CFTC Finds Celsius Network, Ex-CEO Guilty of Breaking Rules
CFTC Finds Celsius Network, Ex-CEO Guilty of Breaking Rules

CFTC Finds Celsius Network, Ex-CEO Guilty of Breaking Rules

• The Commodity Futures Trading Commission (CFTC) investigators have ruled that crypto lender Celsius Network and its former CEO Alex Mashinsky violated US rules before the company collapsed.
• New York Attorney General Letitia James accused Mashinsky of defrauding hundreds of thousands of investors out of billions of dollars and using false representations to entice customers to deposit funds.
• The CFTC’s action against Celsius comes as the agency has become increasingly involved in the crypto industry as of late, filing a lawsuit against Binance and its founder Changpeng “CZ” Zhao on allegations that the exchange offered unregistered derivatives trading.

CFTC Finds Celsius Network and Its Ex-CEO Guilty of Breaking Rules

The Commodity Futures Trading Commission (CFTC) investigators have ruled that crypto lender Celsius Network and its former CEO Alex Mashinsky violated US rules before the company collapsed, according to Bloomberg. If the majority of the CFTC’s commissioners agree with these conclusions, the agency could file a case in federal court within the month.

New York AG Accuses Mashinsky Of Fraud

New York Attorney General Letitia James has accused Mashinsky of defrauding hundreds of thousands of investors, including over 26,000 New Yorkers, out of billions of dollars. She alleged that he used “false and misleading representations” to entice customers to deposit billions of dollars into his platform. His lawyers argued that this lawsuit demonstrates a lack of understanding about Celsius’s business.

Celsius Experiences Surge in Popularity During Pandemic

Mashinsky co-founded Celsius in 2017 and raised funds through an initial coin offering. The company experienced a surge in popularity during the pandemic by introducing loan offerings and attractive interest rates for virtual token deposits which were promoted as safer alternatives to those offered by traditional banks. However, due to a downturn in market prices alongside Terra’s algorithmic stablecoin UST failing, this led to customer withdrawals resulting in freezing withdrawals and eventually filing for bankruptcy protection a month later.

SEC & Federal Prosecutors Also Investigating

The Securities & Exchange Commission (SEC) as well as federal prosecutors in Manhattan are also conducting their own investigations into Celsius according to bankruptcy filings from earlier this year. This suggests increasing scrutiny from regulators regarding cryptocurrency firms operating without registering with them or providing false information leading to fraud charges being pursued by authorities such as James’ office in New York State.

Increasing Involvement From CFTC In Crypto Industry

The CFTC announced last month that it is suing Binance and founder Changpeng “CZ” Zhao on allegations that they knowingly offered unregistered derivatives trading services which further illustrates how they are clamping down on those breaking regulations within cryptocurrency markets even outside American borders with Binance headquartered mainly in Malta and Singapore but also having offices globally including London & Tokyo . Needless to say this news signals increased involvement from US regulators especially when it comes tackling dubious activities occurring involving digital assets across different countries worldwide