In a stunning turn of events, the former CEO of crypto lender Celsius, Alex Mashinsky, is now facing criminal charges related to fraud and misleading users.


The United States Attorney for the Southern District of New York, along with the Federal Bureau of Investigation, announced the charges against Mashinsky while reaching a "non-prosecution agreement" with Celsius itself.


The U.S. Justice Department has accused Mashinsky of securities fraud, commodities fraud, and wire fraud, alleging that he deceived customers and misrepresented Celsius' success, profitability, and investment activities involving user funds. However, authorities have managed to strike a deal with Celsius, which has agreed to acknowledge its involvement in the fraudulent activities.


U.S. Attorney Damian Williams stated firmly that anyone who deceives ordinary investors for personal gain will be held accountable, regardless of whether it's traditional fraud or a cryptocurrency-related scheme. The charges also extend to former Celsius chief revenue officer Roni Cohen-Pavon, who faces allegations of conspiracy, securities fraud, market manipulation, and wire fraud. It is claimed that Mashinsky profited around $42 million by artificially inflating the price of the Celsius (CEL) token, while Cohen-Pavon allegedly pocketed approximately $3.6 million.


Mashinsky, who resides in New York, was reportedly arrested on July 13 following the indictment, which comprises seven criminal counts.


Cohen-Pavon, on the other hand, is an Israeli resident whose current whereabouts are unknown. The sealed indictment was originally filed in November 2022.


Simultaneously, the Commodity Futures Trading Commission has lodged a complaint against Celsius and Mashinsky, asserting that Celsius acted as an unregistered commodity pool operator, while Mashinsky himself was an unregistered associated person, in violation of the Commodity Exchange Act.


These criminal charges come amidst a series of legal actions taken against Celsius and Mashinsky following the platform's collapse and financial troubles in 2022. Celsius had temporarily halted withdrawals, and state securities regulators in the U.S. had been investigating the company.


The New York Attorney General's office filed a lawsuit against Mashinsky in January 2023, accusing him of misleading Celsius investors, resulting in significant financial losses. The U.S. Securities and Exchange Commission followed suit on July 13, filing a civil suit with similar allegations against Celsius and Mashinsky. Additionally, the Federal Trade Commission has imposed a hefty $4.7 billion fine on Celsius.