Celsius and former CEO Mashinsky broke US rules, CFTC concludes: Bloomberg

Quick Take

  • Investigators at the CFTC concluded that bankrupt cryptocurrency lender Celsius Network and its former chief executive officer broke U.S. rules before the firm collapsed, according to a report from Bloomberg. 
  • Attorneys at the CFTC found that Celsius misled investors and should have registered with the regulator, while adding that former CEO Alex Mashinsky was also in breach of regulations, Bloomberg reports. 

Investigators at the Commodity Futures Trading Commission have concluded that bankrupt cryptocurrency lender Celsius Network and its former chief executive officer broke United States rules before the firm collapsed, according to a report from Bloomberg News.

The agency could file a case in federal court as soon as this month if a majority of the CFTC’s commissioners agree with that conclusion, Bloomberg reported citing people familiar with the matter. Attorneys at the CFTC found that Celsius misled investors and should have registered with the regulator, while adding that former CEO Alex Mashinsky also broke regulations, Bloomberg reported. 

The CFTC did not immediately respond to a request for comment from The Block.  

Celsius’ downfall

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The firm filed for bankruptcy about a year ago owing billions of dollars to investors. A court-ordered bankruptcy examiner’s report found that Celsius made risky investment bets with customer funds and hid the extent to which it was market-making for its native token. 

The examiner also accused former CEO Mashinsky of selling the native token, CEL, while telling the public that he was either buying more or holding. 

New York Attorney General Letitia James sued Mashinsky for defrauding investors, including more than 26,000 New Yorkers, out of billions of dollars in crypto, earlier this year. 


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About Author

Sarah is a reporter at The Block covering policy, regulation and legal happenings. Before, Sarah was a reporter with CQ Legal writing about securities regulation, which is where she first started reporting on crypto. Sarah has also written for The Bond Buyer and American Banker, among other finance-related publications. She graduated from the University of Missouri and earned a degree in print and digital journalism. Sarah is based in Washington D.C., and is an avid coffee lover. You can follow her on Twitter @ForTheWynn.

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