
Paraphrased Text: Alex Mashinsky, the former CEO of Celsius, a bankrupt cryptocurrency lender, was apprehended on federal charges of defrauding numerous customers by providing misleading information about his business before its collapse. Alongside criminal charges, Mashinsky and his company are also facing civil fraud charges from regulatory bodies, including the Securities and Exchange Commission and the Commodity Futures Trading Commission. Furthermore, Mashinsky and two co-founders are separately facing fraud charges from the Federal Trade Commission.
The Justice Department alleges that Mashinsky orchestrated an extensive scheme to deceive customers by misrepresenting the company's success and the nature of their investments. They further claim that he manipulated the price of Celsius's crypto token while secretly selling it at inflated prices. Celsius, initially positioned as a reliable banking alternative, attracted a significant customer base, reaching $25 billion in assets. However, regulators assert that the company distorted its achievements, investment strategies, and customer deposit security.
In addition to the allegations against Mashinsky, prosecutors maintain that he and his former chief revenue officer manipulated the price of Celsius's crypto token for personal gain. Mashinsky allegedly profited $42 million from the scheme, while the chief revenue officer made $3.6 million. Although criminal charges have been filed against the officer as well, she remains abroad and has not been arrested.
The collapse of Celsius occurred during a broader cryptocurrency industry downturn. In June 2022, amidst growing customer panic, Celsius froze $4.7 billion in deposits. The FBI's criminal division in New York describes the fraudulent conduct and lies as the downfall of the Celsius platform and its offerings. As part of a separate settlement, Celsius is prohibited from handling customer deposits and faces a $4.7 billion fine, which will be suspended while customers are repaid through the bankruptcy process.