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Alex Mashinsky Arrested as Several Agencies Sue Celsius and the Ex CEO

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Alex Mashinsky, co-founder and former Chief Executive of the imploded Celsius Network, got arrested on Thursday, Bloomberg reported. The 58-year-old business executive and his collapsed crypto lending firm face a lawsuit from the US Securities and Exchange Commission (SEC) over securities fraud. The US DOJ, CTFC, and FTC also filed lawsuits against the former CEO.

Celsius and Mashinsky Charged with Securities Fraud

Celsius Network co-founder and former CEO Alex Mashinksy was arrested on Thursday after the SEC filed a lawsuit against the crypto lender, accusing it of securities fraud. According to Bloomberg, the Ukraine-born crypto entrepreneur was detained in the morning hours on July 13.

The move comes shortly after the SEC unveiled it has filed charges against Celsius, a crypto lending firm that collapsed last year due to insolvency. The report states that the criminal case is not public for now.

Earlier this month, Bloomberg reported that Celsius and Mashinsky may also face legal action from the Commodity Futures Trading Commission (CFTC), another US financial regulator. The CFTC reported that the troubled crypto firm and Mashinsky violated US regulations by misleading investors.

Celsius Bankruptcy and the New Owner of Crypto Lender’s Assets

The SEC’s lawsuit against Celsius Network comes exactly a year after the crypto lender declared bankruptcy after revealing a huge dent in its balance sheet caused by the catastrophic collapse of the Terraform ecosystem in May 2022.

As a result, Celsius could not cope with a string of customer withdrawals, leading to a collapse. In its bankruptcy filing, the crypto lender reported it had between $1 billion and $10 billion in assets and liabilities and over 100,000 creditors.

The implosion led to a bidding war for the bankrupt Celsius Network between multiple Wall Street firms. In May 2023, it was revealed that the crypto consortium Fahrenheit won the battle to acquire the company’s assets.

Fahrenheit, the group of buyers that includes prominent firms such as venture capital (VC) investor Arrington Capital and miner US Bitcoin Corp, ousted NovaWulf’s attempts to buy out Celsius, whose assets were previously valued at roughly $2 billion. Under the new deal, it was reported that the new entity would secure $450 million to $500 million in liquid crypto funds. At the same time, US Bitcoin Corp would build a set of crypto mining facilities, including a brand new 100-megawatt plant.

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The post Alex Mashinsky Arrested as Several Agencies Sue Celsius and the Ex CEO appeared first on Tokenist.

This article originally appeared on The Tokenist

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