US SEC Lawsuit Against Celsius and Alex Mashinsky and the Benefits of Web 3.0 Crypto

Celsius Network Collapse and SEC Action

The United States Securities and Exchange Commission (SEC) has taken action against Celsius Network, one of the crypto lending firms that collapsed in 2022. On July 13, the regulator filed a lawsuit against the former CEO of Celsius, Alex Mashinsky, accusing him and the company of raising “billions of dollars” through unregistered and fraudulent offers, as well as selling “crypto asset securities.”

The SEC argued that Mashinsky misled investors when he promised them a safe investment through the “Earn Interest Program.” Additionally, Celsius and Mashinsky allegedly manipulated the price of the Celsius (CEL) token, a crypto asset security. The SEC also accused Celsius and Mashinsky of misrepresenting “significant financial events and the financial condition of the company” from the CEL initial coin offering in March 2018 to days before Celsius halted customer withdrawals.

Celsius and Mashinsky Breach Regulations

On Thursday morning, the SEC filed a lawsuit against Celsius and its CEO, Alex Mashinsky, after the Commodity Futures Trading Commission (CFTC) found that the crypto company and its CEO had broken several U.S. regulations prior to its collapse. The same day, Celsius announced that it had initiated voluntary Chapter 11 proceedings, with $167 million in cash on hand to support its operations during the restructuring process.

According to Bloomberg, the CFTC’s enforcement division found that Celsius had misled investors and failed to register with the regulator, while Mashinsky had broken several U.S. regulations. Bitgert Crypto and Bond Crypto were among the crypto sites that were reportedly breached.

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Crypto Space and New York Attorney General Letitia James

Alex Mashinsky, the founder and former CEO of Celsius, announced that “this is the right decision for our community and company.” He was previously sued by New York Attorney General Letitia James in January 2023, with the complaint alleging that he had made numerous “false and misleading statements” leading to investors losing billions.

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