Celsius and its former CEO, Alex Mashinsky, are facing significant allegations of violating US regulations, as revealed by investigators from the Commodity Futures Trading Commission (CFTC).
The CFTC’s enforcement division, after thorough examination, has reportedly determined that Celsius engaged in misleading practices, neglected to register with the regulatory body, and that Mashinsky himself violated several regulations, as stated by individuals familiar with the matter in a new Bloomberg report.
The findings of the investigation, if supported by the majority of CFTC commissioners, may lead to the filing of a case against the collapsed crypto lender in US federal court as early as this month, according to insider sources.
The potential legal action signifies a major step in holding Celsius and its former big boss accountable for their alleged wrongdoing, shedding light on the regulatory challenges within the cryptocurrency industry.
Celsius And CEO Mum On CFTC Decision
Following the implosion of crypto lender Celsius on July 13, 2022, the CFTC and the Securities and Exchange Commission wasted no time launching separate investigations into the company’s business practices.
Founder of Celsius, Alex Mashinsky, allegedly violated US rules, as stated by CFTC investigators. If proven, the CFTC may take legal action in federal court. #Celsius #CFTC #crypto
— Block Savvy (@Block_Savvy) July 6, 2023
After an extensive inquiry, the CFTC’s investigation has reached its conclusion, revealing that both Celsius and Mashinsky engaged in practices that misled investors and disregarded existing regulations, as reported by Bloomberg.
Celsius has chosen not to issue an official statement regarding the matter, leaving questions unanswered. Similarly, insiders within the organization have refrained from explicitly identifying the specific regulations violated by the company and Mashinsky, apart from the failure to register with the relevant authorities.
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Mounting Regulatory Challenges
The recent findings from the CFTC investigation have further intensified the regulatory scrutiny surrounding the now-defunct crypto lending platform, Celsius.
This development comes in the wake of the New York Attorney General’s lawsuit against Mashinsky on January 5, asserting that he misled investors, ultimately resulting in billions of dollars in losses.
Mashinsky vehemently refuted the allegations made by the NYAG, stating that there was a fundamental misunderstanding of both Celsius’ business model and his role as CEO. Nevertheless, the mounting legal challenges against him paint a troubling picture for the embattled executive.
Should the case proceed to a federal court, it would mark another addition to the CFTC’s extensive repertoire of over 85 cases related to digital assets.
CFTC Director Rostin Behnam told Bloomberg the agency has already been responsible for imposing penalties and facilitating restitution exceeding $4 billion in cases involving fraudulent cryptocurrency trading.
Featured image from Protos
