Alex Machinsky, the founder of bankrupt cryptocurrency lender Celsius, has been arrested and charged with multiple counts of fraud.
In a new court document filed July 11, Mashinksy, along with Celsius’s chief revenue officer Roni Cohen-Pavon and other employees of the company, are accused of perpetrating two schemes involving CEL, the crypto broker’s equity capital. , is involved in defrauding customers.
Mashinsky, who founded Celsius in 2018, is accused of misleading customers into believing the company would operate as a “modern day bank” where customers can earn interest on deposited crypto assets but instead make high-risk transactions with their made money.
“Mashinsky operated Celsius as a high-risk investment fund, taking money from clients under false and misleading pretenses and turning clients into unwitting investors in a business far riskier and far less profitable than what Mashinsky had represented.”
In addition, Mashinsky was alleged to have deliberately manipulated the price of CEL, causing the public to buy it at an inflated price, greatly benefiting the defendants.
“In the second plan, Mashinksy Cohen-Pavon and other Celsius employees improperly manipulated the price of CEL, causing the public to buy CEL at inflated prices, which personally benefited Mashinksy and Cohen-Pavon as they secretly built their own CEL sold at prices they knew did not reflect the true market value of the token.
The defendants’ allegations include wire fraud, commodities fraud, securities fraud and market manipulation.
To add to his troubles, Mashinsky is also being sued by the US Securities and Exchange Commission (SEC) for similar reasons. According to the regulatory body, Mashinsky raised billions of dollars by lying to customers and offering unregistered securities.
“Defendants falsely promised investors a safe, high-return investment through the Earn Interest Program, misled investors about the financial success of Celsius’ company, and fraudulently manipulated the price of Celsius’ proprietary crypto asset security – the so-called “CELL” sign.
The Defendants’ plan unraveled in June 2022, leaving investors unable to withdraw billions of dollars worth of crypto assets from Celsius’s online platform.”
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