Authorities on Monday arrested Alex Mashinsky, the founder and former CEO of the bankrupt Celsius crypto lending company, Bloomberg first reported.
Mashinsky has been reportedly charged with fraud and attempted manipulation of other crypto currencies shortly before Celsius’ own collapse. Celsius has also agreed to a $4.7 billion settlement with government regulators, CNBC reported.
The arrest is the latest high-profile crackdown on the crypto market in recent months. We’ve curated insights and analysis on what experts make of future of crypto in the U.S.
- Celsius’ scheme “was more egregious than FTX,” argues crypto insider Ram Ahluwalia. In a Twitter thread following the earlier state charges against Celsius, he details how several departments across Celsius were both aware of and encouraged to engage in fraudulent behavior, whereas the alleged FTX fraud was centralized around founder Sam Bankman-Fried (a previous Semafor investor).
- Cryptocurrency companies are fleeing the U.S. to avoid regulations. After failing to rebrand themselves as compliant businesses eager to work with government, crypto trading firms and venture capital companies are scattering executives across Europe, Asia, and the Caribbean in an effort to decentralize operations. But an all-out exodus is unlikely because energy costs to mine for crypto still remain much lower in the U.S. — The New York Times
- A new Senate-led crypto regulation bill is the “the best shot at becoming law,” writes Sam Lyman for Forbes. Republicans are reassured that co-sponsor Sen. Cynthia Lummis (R-Wy.) — dubbed Congress’ “crypto queen” — will help preserve the U.S. as a hub for crypto miners and entrepreneurs, while Democrats have Sen. Kristen Gillibrand’s (D-NY) background of cracking down on insider trading. Their bill will help address the “million-dollar question” of whether crypto is a security or commodity.
Mashinsky reportedly made misleading statements hoping to push investors to purchase Celsius’ own currency, CEL, and to redirect their funds into the company’s Earn Interest Program, with promised returns as high as 17% on their deposits, according to the complaint.
The Security and Exchanges Commission also alleges that Mashinsky told investors that Celsius’ profitability was much higher than it actually was and that he reassured investors that the company did not engage in risky trading.
Mashinsky faces separate charges from New York state prosecutors for allegedly orchestrating a $20 billion fraud scheme against investors.