Investigators from the Commodity Futures Trading Commission (CFTC) concluded that bankrupt cryptocurrency lender Celsius Network and its former chief executive had violated US rules prior to the firm's collapse.
CFTC Investigators Believe Crypto Credit Firm Celsius And Its Former CEO Are Guilty
People who said the agency could file a lawsuit in federal court this month if the majority of the CFTC's commissioners agreed with that conclusion did not want to be named.
One of those individuals said attorneys at the enforcement department had determined that Celsius had misled investors and should have registered with the regulator, and that former CEO Alex Mashinsky had also violated regulations.
Celsius has grown in popularity during the pandemic. The company offered loans and paid higher interest rates on virtual token deposits than those in traditional finance.
At the same time, Mashinsky regularly positioned offers as safe as those available in banks.
However, the collapse of the once popular token TerraUSD last year and the general downturn in the crypto market caused the firm's risky investments to backfire.
Celsius was facing a flood of exits, although the company vehemently denied that it was facing huge losses. In June 2022, the customer froze withdrawals. A month later, the firm filed for bankruptcy protection.
Celsius's massive collapse led to legal action, including allegations by New York Attorney General Letitia James that Mashinsky made false statements about the security of the crypto platform and misrepresented the company's declining finances.
In a lawsuit filed in January, James alleged that Mashinsky had defrauded hundreds of thousands of investors, including more than 26,000 New Yorkers, for billions of dollars.
*Not investment advice.