According to a recently filed court document, Alex Machinsky, the founder of the bankrupt crypto lender Celsius, has been arrested and charged with various counts of fraud.
Celsius chief revenue officer take part in 2 fraudulent schemes
The document also accuses Celsius’s chief revenue officer, Roni Cohen-Pavon, and other employees of the firm of participating in two fraudulent schemes involving CEL, the cryptocurrency broker’s native asset, with the aim of deceiving customers.
The founder of Celsius, Mashinsky, has been accused of deceiving customers by promoting the company as a “modern-day bank” that allows customers to earn interest on their deposited crypto assets. However, it was discovered that the company made risky trades with the funds instead.
“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.”
It has been claimed that Mashinksy intentionally manipulated the price of CEL, leading the public to buy it at a higher price and causing substantial gains for 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.”
Celsius in the news
Bloomberg states that the CFTC’s enforcement unit attorneys discovered that Celsius deceived investors and did not register with the regulatory body, and they also asserted that Mashinsky violated regulations.
According to sources familiar with the situation, there are reports that the CFTC may take legal action against the company as early as this month, pending agreement from the majority of the agency’s commissioners on the investigators’ conclusions.
It has been revealed through bankruptcy filings that Celsius is also under investigation by the SEC and the U.S. Attorney’s Office for the Southern District of New York.
Check out our previous article in order to learn more details about this.
