The former CEO of Celsius Network, Alex Mashinsky, was arrested today by the U.S. Department of Justice, following which seven criminal charges were filed against him. Michael A. Brodack, the special agent in charge of the Criminal Division of the New York Field Office, revealed that Mashinsky, aged 57, allegedly manipulated the price of Celsius’ native digital asset, CEL and unlawfully gained over $40 million.
During the conference, Brodack stated, “When something appears too good to be true, it usually is.” He also disclosed that Roni Cohen-Pavon, Celsius’s former chief revenue officer, aged 36, received approximately $3.6 million.
In the Thursday indictment, the federal authorities charged Mashinsky with securities fraud, commodities fraud, two counts of wire fraud, and conspiracy to manipulate the price of CEL. Cohen-Pavon was charged with four criminal counts, including conspiracy to commit securities fraud, market manipulation, and wire fraud.
U.S. Attorney Damian Williams emphasised in a statement on Thursday, “This case, along with the other recent fraud allegations in the cryptocurrency industry, may seem complex. However, our message today is simple: If you deceive ordinary investors into enriching yourself, you will be held accountable.”
Celsius, a cryptocurrency lender that made grand promises of high returns and claimed to be “secure,” faced a suspension of user withdrawals last June due to “extreme market conditions.” Subsequently, the company filed for bankruptcy a month later, revealing a deficit of $1.2 billion in assets compared to liabilities.
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
The DOJ indictment pointed out that Celsius was one of the largest crypto platforms globally, with approximately $25 billion in holdings at its peak. Contrary to Mashinsky’s portrayal of Celsius as a modern-day bank, the indictment alleged that he deceived investors and engaged in risky trading practices.
The downfall of Celsius and numerous other crypto companies occurred last year when the price of Bitcoin, the largest cryptocurrency by market capitalisation, plummeted, causing financial turmoil and bankruptcy for many firms.