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Celsius CEO fraud overview:
- Who: The founder of the now-bankrupt cryptocurrency company Celsius Network LLC has been charged with fraud.
- Why: Alexander Mashinsky is accused of misleading customers and artificially inflating the value of his company’s proprietary crypto token, CEL.
- Where: The Celsius CEO fraud indictment was filed in a New York federal court.
The founder and former CEO of the now-bankrupt cryptocurrency company Celsius Network LLC has been charged in connection with multibillion-dollar fraud and market manipulation schemes.
On July 13, Alexander Mashinsky appeared in a Manhattan federal court to face charges he misled customers and artificially inflated the value of his company’s proprietary crypto token, CEL.
Mashinsky is facing charges along with co-defendant Roni Cohen-Pavon, who served as Celsius’ chief revenue officer.
According to a recently unsealed indictment, Mashinsky is charged with securities fraud, commodities fraud and wire fraud for allegedly defrauding customers and misleading them about core aspects of the company he founded, including Celsius’ success, profitability and the nature of the investments Celsius made using customer funds.
Mashinsky and Cohen-Pavon are further charged with conspiracy, securities fraud, market manipulation and wire fraud for allegedly illicitly manipulating the price of CEL, all while secretly selling their own CEL tokens at artificially inflated prices, the United States Attorney for the Southern District of New York Damian Williams said in a statement.
Indictment alleges CEO misled customers and inflated crypto price
Throughout his tenure as CEO of Celsius, Mashinsky repeatedly made public misrepresentations regarding core aspects of Celsius’s business and financial condition in order to induce retail customers to provide their crypto assets to Celsius and continue to use its services, prosecutors say.
According to the indictment, as Mashinsky falsely portrayed Celsius as a safe and secure institution, Celsius’s customer base grew “exponentially.” By the fall of 2021, Celsius had grown to become one of the largest crypto platforms in the world, purportedly holding approximately $25 billion in assets at its peak, prosecutors say.
“Without Celsius’s aggressive and illegal price manipulation, the price of CEL would have been drastically lower,” Williams alleges.
On June 12, 2022, Celsius announced it was halting all customer withdrawals from the Celsius platform, at which time hundreds of thousands of Celsius customers still had approximately $4.7 billion worth of crypto assets on the platform, none of which they could access, Williams says.
“This case, like the others my Office has recently announced alleging fraud in the crypto economy, may appear complicated,” Williams said. “But the message we send today is quite simple: if you rip off ordinary investors to line your own pockets, we will hold you accountable.”
Mashinsky has pleaded not guilty to the charges.
Meanwhile, in June, Binance reached an agreement with the U.S. Securities and Exchange Commission (SEC) that will allow the cryptocurrency exchange to continue operating amidst the agency’s ongoing enforcement lawsuit.
What do you think of the allegations against Mashinsky in this case? Let us know in the comments!
The government is represented by Adam Sloan Hobson, Allison Carol Nichols and Noah David Solowiejczyk of the U.S. Department of Justice.
The Celsius fraud case is U.S. v. Alexander Mashinsky, Case No. 1:23-cr-00347, in the U.S. District Court for the Southern District of New York.
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