The former CEO of cryptocurrency lending platform Celsius Network, Alex Mashinsky, has been arrested on federal fraud charges. He faces allegations of securities fraud, wire fraud, and commodities fraud, accused of deceiving customers and misrepresenting the company’s operations.
Both Mashinsky and the firm he founded are currently facing lawsuits from the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). An indictment revealed on Thursday states that Mashinsky portrayed Celsius as a modern banking institution, where customers could safely deposit crypto assets and earn interest. However, it claims he actually operated Celsius as a high-risk investment fund, leading customers to believe they were engaging in a much safer venture than what it truly was.
Mashinsky has pleaded not guilty and has been released on a $40 million bond. Celsius filed for bankruptcy and halted customer withdrawals in July, citing a $1.19 billion deficit on its balance sheet, and Mashinsky resigned as CEO in September.