Alexander Mashinsky was charged with deception, market manipulation and fraud, the Manhattan U.S. Attorney Damian Williams’ office said in a press release, for which the businessman “misled his clients and misrepresented them about fundamental aspects of the society it created.”
The 50-year-old man, born in Ukraine, faces several decades in prison as five of the seven charges against him carry a maximum sentence of twenty years in prison.
Mashinsky must be presented this Thursday before a federal judge in Manhattan.
Former Celsius number two Roni Cohen-Pavon, who resides in Israel, was also charged.
At the height of its popularity, at the end of 2021, the company had more than a million customers and reported more than $25 billion in assets invested in the platform.
But the sudden drop in the value of several cryptocurrencies in the spring of 2022, together with the implosion of the digital currency Terra (UST), it rocked the market and caused on-chain failures.
Caught in that chaos and then affected by massive withdrawals from its clients, Celsius decided in mid-June 2022 to freeze its assets and suspend any withdrawals, then file for bankruptcy a month later.
The authorities particularly denounce Mashinsky’s management in the midst of the crisis, as days before freezing the funds he continued to assure clients that Celsius “maintained solid finances and had sufficient liquidity to meet withdrawal requests,” according to the press release.
In addition, the former boss is accused of manipulating the price of CEL, the cryptocurrency created by Celsius, especially by secretly using customer funds to buy the currency and artificially inflating its price.
According to the Federal Trade Commission (FTC), Celsius executives took more than $4 billion of client assets to finance, among other things, the company’s operation, high-risk investments, and unsecured loans.
FOUNTAIN: AFP
