Investigators in the enforcement unit of the Commodity Futures Trading Commission (CFTC) have recently determined that the bankrupt crypto lender Celsius Network and its former CEO Alex Mashinsky violated U.S. laws before the firm's collapse. The allegations of the CFTC include misleading investors and operating without registration with the regulator. Sources familiar with the issue said the CFTC could file a lawsuit against Celsius in federal court as soon as July if a majority of the agency's commissioners agree with the conclusion. - Celsius and Mashinsky previously also faced allegations from the U.S. Securities and Exchange Commission (SEC) and federal prosecutors in New York.
- Following the firm's bankruptcy, New York Attorney General (AG) Letitia James claimed that Mashinsky made false statements about the declining financial condition of Celsius, misleading investors.
- James also stated that the former CEO defrauded hundreds of thousands of investors out of billions of dollars.
Celsius offered loans and paid interest rates on crypto deposits. - The company filed for Chapter 11 bankruptcy protection in July 2022, mainly due to its liquidity issues and the crypto market downturn triggered by the multi-billion dollar Terra ecosystem's collapse that wiped over $60B off the crypto market.
- In May, Fahrenheit, a crypto consortium involving blockchain-focused venture capital (VC) firm Arrington Capital and crypto miner US Bitcoin Corp, won a bid to acquire the assets of Celsius Network LLD.
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