The U.S. Securities and Exchange Commission (SEC) has initiated a legal battle against the now-defunct cryptocurrency lending platform, Celsius, and its erstwhile CEO, Alex Mashinsky, as evidenced by court filings.
Allegations of Fraudulent and Unregistered Crypto Securities
The SEC leveled charges against both Celsius and Mashinsky, alleging they had gathered billions by conducting deceitful and unregistered transactions involving “crypto asset securities”. The agency has also stated that they consistently misled investors concerning Celsius’s financial health, and manipulated the valuation of the CEL token, Celsius’s proprietary cryptocurrency.
CFTC Investigation’s Findings
In a related development, the Commodity Futures Trading Commission (CFTC) concluded an investigation, indicating that Celsius and Mashinsky violated U.S. regulations prior to the company’s demise.
Celsius’s Bankruptcy and High Risk Bets
Celsius, which experienced one of the most dramatic downfalls in the cryptocurrency sector, sought bankruptcy protection roughly a year ago. The company, once boasting $30 billion in assets, found itself in debt to investors to the tune of billions of dollars. A court-appointed bankruptcy examiner’s analysis disclosed that Celsius had made high-risk investment decisions using client funds.
Mashinsky’s Defence
Back in May, Mashinsky presented a defense arguing that the cryptocurrency offerings provided by Celsius could not be classified as either securities or commodities, thereby disputing the allegations laid against him and his former company.
With these lawsuits, the SEC and CFTC continue their vigilance to protect investors and ensure the stability and transparency of the financial market, and their actions underscore the importance of regulatory compliance in the ever-evolving landscape of cryptocurrency.
