Security

Founder of defunct crypto exchange Celsius Network arrested

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July 13, 2023

Authorities have arrested Alexander Mashinsky, founder of defunct cryptocurrency exchange Celsius Network, on charges of misrepresenting the organization's stability prior to its collapse in 2022, according to a AOL report.

The Securities and Exchange Commission and the Federal Trade Commission filed lawsuits that claim Mashinsky made false claims about returns on investment, the size of its user base and its crypto asset. The exchange allegedly manipulated the price of its asset.

In June 2022, users were unable to withdraw billions of dollars worth of crypto assets, and the exchange filed for bankruptcy in July.

The lawsuit claims that the exchange said all its funds were safe while internally, an executive said, "We don't have any profitable services."

"From its inception Celsius was taking far greater risks with customers' money than Mashinsky advertised," Damian Williams, U.S. attorney, told the news outlet. "A platform that advertised as 'the safest place for your crypto' left investors holding billions in losses."

"Ultimately the defendants' elaborate crypto fraud collapsed under its own weight," Gubir Grewal, SEC enforcement director, wrote in the lawsuit. "When it collapsed unfortunately it left thousands of investors lined up at the door of bankruptcy court."