Celsius CEO Alexander Mashinsky heavily manipulated the price of the crypto lender’s token through secret and well-timed purchases – and made an extra $40 million in profit, investigators alleged.
As the walls started caving in at crypto lender Celsius Networks, its founder and CEO, Alexander Mashinsky, assured investors that everything was fine and that the company had more than enough liquidity to make it through.Behind the scenes, Celsius staffers were calling the beleaguered crypto business “a sinking ship” whose business model “is fundamentally broken,” court documents revealed.
Celsius, which is now under new management, has reached a non-prosecution agreement in the criminal case and has agreed to fully cooperate. It also reached a $4.7 billion settlement with the Federal Trade Commission for lying to investors and agreed to never engage in the sale of securities again. “He looks forward to vigorously defending himself in court against these baseless charges,” Ohring said.
Investigators say Celsius’ pitch revolved around two offerings: the sale of its own coin, CEL, which it promised investors generated high “earning rates,” and its Earn Interest Program which offered returns as high as 17% if investors allowed Celsius to use their deposits to make loans. “Celsius has been consistently losing money and is facing an erosion in the capital position as well as liquidity constraints. The current business model is not financially sustainable,” an internal report circulated among Celsius executives concluded in early 2022, according to court filings.
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