An investigation by the Commodity Futures Trading Commission (CFTC) reportedly concluded that bankrupt cryptocurrency lender Celsius Network and its former CEO, Alex Mashinsky, violated US laws prior to the company’s collapse last year.
According to Bloomberg, lawyers from the CFTC’s enforcement unit found that Celsius misled investors and failed to register with the regulator. They also claim that Mashinsky broke the rules.
Citing people familiar with the matter, the report says the CFTC could file a case against the company as early as this month if a majority of the agency’s commissioners agree with the investigators’ findings.
Bankruptcy filings show that the U.S. Securities and Exchange Commission (SEC) and the U.S. Attorney’s Office for the Southern District of New York are also investigating Celsius.
Mashinsky is already facing legal action. In a lawsuit to bar the co-founder of Celsius from doing business and sue him for damages, New York Attorney General Letitia accuses James Mashinsky of making false statements about the security of the lending platform and concealing the deteriorating financial condition of the company.
James also alleges that Mashinsky defrauded hundreds of thousands of investors, including more than 26,000 New Yorkers, out of billions of dollars.
Says James after filing the lawsuit in January,
“As a former CEO of Celsius, Alex Mashinsky promised to lead investors to financial freedom, but led them down a path of financial ruin. The law is clear that making false and unsubstantiated promises and misleading investors is illegal.”
In an effort to dismiss the case, Mashinsky says the lawsuit shows a fundamental misunderstanding of how Celsius works and its role in the company.
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Image generated: Midway through the journey