US Attorney’s Office announces criminal fraud charges against Alex Mashinsky
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US Attorney’s Office announces criminal fraud charges against Alex Mashinsky

The United States Attorney for the Southern District of New York and the Federal Bureau of Investigation have announced fraud charges against the former CEO of bankrupt crypto lender Celsius, Alex Mashinsky.

In a July 13 announcement, the US Justice Department celsius-founder-and-former-chief-revenue-officer-charged-connection-multibillion”>said it had charged Mashinsky with securities fraud, commodities fraud and wire fraud related to allegedly defrauding customers and misleading them about Celsius’ “success, profitability, and the nature of the investments” the platform made with user funds. However, authorities said they had reached a “non-prosecution agreement” with Celsius, which “agreed to accept responsibility for its role in the fraudulent schemes.”

“If you rip off ordinary investors to line your own pockets, we will hold you accountable,” said US Attorney Damian Williams. “Whether it’s old-school fraud or some new-school crypto scheme, it doesn’t matter one bit. It’s all fraud to us. And we’ll be here to catch it.”

US Attorney Damian Williams addressing reporters on July 13.

Former Celsius chief revenue officer Roni Cohen-Pavon and Mashinsky will also face charges of conspiracy, securities fraud, market manipulation and wire fraud related to manipulating the price of the Celsius (CEL) token. According to the allegations, Mashinsky earned roughly $42 million in profits from sales of CEL by artificially inflating the price, while Cohen-Pavon pocketed roughly $3.6 million.

Authorities reportedly arrested Mashinsky, a New York resident, on July 13 as part of the indictment, which includes seven criminal counts. Cohen-Pavon, a resident of Israel whose whereabouts were unknown at the time of publication, faces four counts. According to Williams, the indictment was first brought in November 2022, but it had been sealed until today.

The criminal charges came in parallel to those from the Commodity Futures Trading Commission, which announced a complaint against Celsius and Mashinsky on July 13. According to the commission, Celsius allegedly acted as an unregistered commodity pool operator while Mashinsky was an unregistered associated person of said operator, violations of the Commodity Exchange Act.

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The charges came amid a slew of legal actions against Celsius and Mashinsky following the collapse of the platform and financial difficulties in 2022. Celsius suspended withdrawals on its platform, and many US state securities regulators had also been investigating the firm.

The New York Attorney General’s office filed a suit against Mashinsky on Jan. 5, alleging that the former CEO misled Celsius investors, resulting in billions of dollars in losses. The US Securities and Exchange Commission followed with its own civil suit on July 13, citing similar allegations against Celsius and Mashinsky. In addition, the Federal Trade Commission issued a $4.7-billion fine against Celsius.

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