The former CEO of now-bankrupt crypto lender Celsius, Alex Mashinsky, was reportedly arrested on the morning of July 13. The news broke out minutes after the United States Securities and Exchange Commission filed a lawsuit against the crypto lender on the same day.
The former CEO was reportedly arrested after a probe into the company’s collapse, reported Bloomberg citing people familiar with the matter. Celsius Network filed for bankruptcy on July 14 last year. Mashinsky was found guilty by investigators at the Commodity Futures Trading Commission, which concluded that the former CEO broke numerous U.S. regulations before the company’s implosion in 2022.
The investigation against the troubled crypto lender began after New York Attorney General sued Mashinsky on Jan. 5. The NYAG alleged that the former CEO misled investors and caused billions of dollars in losses.
I’m suing the former CEO of cryptocurrency platform @CelsiusNetwork for defrauding investors out of billions of dollars.
Alex Mashinsky lied to people about the risks of investing in Celsius, hid its deteriorating financial condition, and failed to register in New York.
— NY AG James (@NewYorkStateAG) January 5, 2023
The trouble for Celsius and its former CEO began in June last year when the crypto lender abruptly suspended withdrawals on the platform. On June 16, 2022, securities regulators from five different U.S. states opened an investigation into Celsius, and within a month, the platform filed for bankruptcy.
The arrest of Mashinsky and the lawsuit against Celsius comes within months of the SEC’s lawsuits against crypto exchanges Binance and Coinbase.
Celsius network didn’t immediately respond to Cointelegraph’s requests for comments.
This is a developing story, and further information will be added as it becomes available.