Former CEO of Celsius accused of fraud, Celsius operated as a high-risk investment fund
ChainCatcher news reports that, according to the indictment filed by the United States District Court for the Southern District of New York, the United States government has filed charges against former CEO of Celsius Network, Alexander Mashinsky, and Celsius CRO, Roni Cohen-Pavon. Mashinsky orchestrated a fraudulent scheme aimed at deceiving Celsius's customers and personally profiting by manipulating the price of Celsius's proprietary token, CEL.In the first fraudulent scheme, Mashinsky misled customers about key aspects of Celsius's business, including Celsius's success and profitability, as well as the nature of Celsius's investments using customer funds. Mashinsky portrayed Celsius as a modern bank where customers could safely deposit crypto assets and earn interest. However, in reality, Mashinsky operated Celsius as a high-risk investment fund, receiving customer funds in a false and misleading manner, making customers unwitting investors in a business that was far riskier and less profitable than Mashinsky claimed.In the second fraudulent scheme, Mashinsky, Cohen-Pavon, and other Celsius employees illegally manipulated the price of CEL, causing the public to purchase CEL at prices above its actual value, thereby benefiting Mashinsky and Cohen-Pavon personally. They artificially supported and increased the price of CEL by purchasing large amounts of CEL in the market. At the same time, they did not disclose to Celsius's customers that they were using customer deposits to fund these market purchases of CEL.Mashinsky actively promoted Celsius through media interviews, his own Twitter account, and Celsius's website. He frequently communicated directly with the Celsius community through weekly "Ask Mashinsky Anything" live sessions, answering questions from customers and potential customers about Celsius. However, Mashinsky made many false and misleading statements during these live sessions. Despite warnings from other Celsius employees, Mashinsky continued to mislead about the nature of Celsius's core business activities during the broadcasts. Furthermore, Mashinsky and Celsius never issued a corrective statement to inform the public and those who watched the live recordings that some of Mashinsky's statements were untrue or misleading.Mashinsky and Cohen-Pavon took advantage of the artificially inflated CEL price to sell their own holdings of CEL for substantial profits. Mashinsky personally gained approximately $42 million from the sale of CEL, while Cohen-Pavon personally gained at least $3.6 million from the sale of CEL. Mashinsky made numerous false and misleading public statements regarding his own CEL sales, claiming that he had not sold CEL, while in fact, he was profiting from the price manipulation he orchestrated.ChainCatcher previously reported that the U.S. Securities and Exchange Commission (SEC), the Department of Justice (DOJ), the Commodity Futures Trading Commission (CFTC), and the Federal Trade Commission (FTC) have all filed lawsuits against Celsius Network and its former CEO, Alex Mashinsky, in the past hour. (source link)
