Following an investigation into the collapse of Celsius Network Ltd., the former CEO of the bankrupt crypto lending company has been arrested and charged with fraud by US authorities. Alex Mashinsky was specifically accused of engaging in fraudulent activities and attempting to manipulate cryptocurrencies. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have also taken legal action by filing lawsuits against Mashinsky and Celsius Network. These developments further highlight the serious allegations surrounding the company’s downfall.

Celsius CEO Alex arrested

Mashinsky was charged with orchestrating a scheme to defraud customers of Celsius Network and its affiliated entities from 2018 through June 2022. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have also filed lawsuits against Mashinsky and the company.

Celsius Network gained popularity by offering high interest rates on digital-asset deposits. However, the company faced a severe setback when the TerraUSD stablecoin collapsed, coupled with a downturn in the digital-asset markets. This left Celsius with a substantial deficit and unable to fulfill customer withdrawal requests.

Mashinsky, who co-founded Celsius in 2017, has been under intense scrutiny from multiple government agencies since the company filed for bankruptcy and declared a staggering $1.19 billion deficit one year ago. New York Attorney General Letitia James had previously sued Mashinsky in January, accusing him of defrauding New York investors by making false and misleading statements about the safety of Celsius.

The recent actions against Celsius and Mashinsky reflect a growing trend of regulatory crackdowns on the cryptocurrency industry. US authorities, including the SEC, DOJ, CFTC, and FTC, have initiated a series of civil and criminal cases this year, targeting various industry players involved in alleged misconduct and fraudulent practices.

Since news of the charges broke, the price of CEL, the token issued by Celsius, has experienced a decline of approximately 6%, currently hovering around 15 cents. This drop follows the SEC’s lawsuit against the lender and Mashinsky. Previously, the token had reached a high of $8 in June 2021.

At the time of this report, Mashinsky’s lawyer has not provided an immediate comment on the charges. The case against Mashinsky is yet another reminder of the need for increased regulatory oversight within the cryptocurrency sector as authorities strive to protect investors and maintain market integrity.