The Securities and Exchange Commission has officially charged Celsius, and founder Alex Mashinsky, with fraud and unregistered offer and sale of securities. The charges follow a series of events that started back in 2022 when insiders stated the company was beginning to tell state regulators that it would file for bankruptcy.
In a press release on July 13, 2023, the Securities and Exchange Commission announced it has charged Celsius and its founder Alex Mashinsky with “unregistered offer and sale of crypto asset securities through Celsius’s lending program, making false and misleading statements, and engaging in market manipulation”.
Gurbir S. Grewal, Director, Division of Enforcement, offered the following statement in the press release:
Celsius lied to investors by presenting itself as a safe investment opportunity and a chance to gain financial freedom, but, behind the scenes, the company operated a failing business model and took significant risks with investors’ crypto assets.
Thousands of retail investors have experienced significant financial hardship as a result of Celsius’s and Mashinsky’s illegal conduct, and today we are holding Celsius and Mashinsky responsible for defrauding thousands of retail investors.
Back in July 2022, it was reported that Celsius had started to alert regulators of impending bankruptcy filing. Things moved swiftly after that, with Celsius attempting to find a solution to the $8 billion in loans and $12 billion in assets, freezing customer accounts, and toying with the idea of releasing a “wrapped token” that will act as a crypto IOU.
The SEC press release closes out by noting that it seeks injunctions against Mashinksy, preventing him from participating in the cryptocurrency industry in any capacity. It also seeks to bar the former CEO from acting as an officer or director of any public company.
With these charges against Celsius, and the ongoing woes with FTX and Sam Bankman-Fried, the cryptocurrency landscape is looking rough. One of the few crypto companies still operating is GME, and its NFT marketplace sales weren’t material to 2022 revenue.