US Attorney's Office charges Alex Mashinsky with criminal fraud
July 13, 2023 8:00 PM
Authorities announced a "non-prosecution agreement" with Celsius, but the company's ex-CEO, Alex Mashinsky, will be prosecuted for fraud and user deception.
Alex Mashinsky, the former CEO of defunct crypto lender Celsius, has been charged with fraud by the US Attorney for the Southern District of New York and the Federal Bureau of Investigation (FBI).
The U.S. Department of Justice announced→ on July 13 that it had filed fraud charges against Mashinsky for supposedly defrauding customers and deceptive them about the "success, earnings, and legitimacy of the investments" that the Celsius platform rendered with user funds. Authorities, on the other hand, announced that they had achieved a "non-prosecution agreement" with Celsius, which "agreed to accept the responsibility for its involvement in the fraudulent schemes."
"If you steal from common investors to fill your own pockets, we are going to hold you accountable," US Attorney Damian Williams stated. Whether it's a tried-and-true con or the latest crypto scheme makes no difference at all. To us, it's all a scam. And we'll be waiting for it."
On July 13, US Attorney Damian Williams spoke to reporters.
In addition to Mashinsky, former Celsius chief financial officer Roni Cohen-Pavon will be charged with conspiracy, securities fraud, market manipulation, and wire fraud for their roles in manipulating the price of the Celsius (CEL) token. According to the charges, Mashinsky profited over $42 million from CEL sales by illegally increasing the price, whereas Cohen-Pavon took approximately $3.6 million.
On July 13th, according to reports, authorities in New York arrested Mashinsky on seven separate criminal counts from the indictment. Cohen-Pavon, an Israeli resident whose location was undisclosed at the time of publishing, is charged on four counts. The indictment was initially brought in November 2022, according to Williams, but it was sealed until today.
The criminal charges followed the Commodity Futures Trading Commission's announcement→ on July 13 of a complaint against Celsius and Mashinsky. Commodity Exchange Act crimes were allegedly committed by Celsius as an unlicensed commodity pool operator and by Mashinsky as an unregistered affiliated person of the said operator, as stated by the commission.
Following the platform's collapse and financial issues in 2022, Celsius and Mashinsky faced a barrage of court lawsuits. Celsius halted withdrawals on its platform, and various state securities regulators in the United States were also looking into the company.
On January 5th, a lawsuit was launched against Mashinsky by the New York Attorney General's office, which claims that billions of dollars in losses were caused by the ex-CEO's deception of Celsius investors. Similar claims were made in a civil suit filed by the U.S. Securities and Exchange Commission (SEC) on July 13 against Celsius and Mashinsky. Celsius was also fined $4.7 billion by the Federal Trade Commission.