I hope you are all having an excellent day, welcome to CryptoGod-1's blog on all things crypto. The big news which emerged towards the end of last week pertained to the founder of Celsius, Alex Mashinsky, pleading not guilty to U.S. fraud charges that he misled customers and artificially inflated the value of his company's propriety crypto token.. Here I will look at all the information and views which have emerged since, and what this moment could mean for crypto down the line.
Alex Mashinsky Arrest
Back in January 2023 Alex Mashinsky was hit with a lawsuit by the New York Attorney General claiming he had mislead customers into investing billions of dollars into Celsius. On Thursday the 13th of July 2023 he was arrested by US authorities as he pled not guilty to the charges of fraud and market manipulation. Mashinsky had portrayed Celsius as "a modern day bank, where customers could safely deposit crypto assets and earn interest”.
An indictment, which was unsealed short after Mashinsky’s arrest, noted that the reality of the platform was that it had operated “as a risky investment fund” that was far less profitable than Celsius had led investors to believe. The criminal case is brought by the federal prosecutors in Manhattan and they added that Celsius made use of some customers money to manipulate the market for a cryptocurrency token called CEL, which is the native token of the Celsius platform.
Currently Celsius is being managed by a team of restructuring professionals led by former JPMorgan Chase banker Chris Ferraro, and has accepted responsibility for its part in the alleged scheme. This was revealed on Thursday as part of a non-prosecution agreement with the Department of Justice.
Mashinsky has been charged with seven counts of fraud, including securities fraud, commodities fraud and wire fraud, by the US department of justice, and could face up to 115 years behind bars. He has been released from custody on a $40 million bond, secured by his Manhattan home, after his plea of not guilty. Damian Williams, US Attorney for the Southern District of New York noted:
“The message we send today is quite simple: If you rip off ordinary investors to line your own pockets, we will hold you accountable. Whether it’s old-school fraud or some new-school crypto scheme, it doesn’t matter one bit. It’s all fraud to us.”
The Securities and Exchange Commission (SEC), along with the Federal Trade Commission and the Commodities and Futures Exchange Commission have all simultaneously filed separate civil charges in Manhattan federal court against Mashinsky. The charges are similar to those brought against FTX founder Sam Bankman-Fried. As part of a settlement with the FTC, Celsius has agreed to pay a $4.7 billion fine, but only after creditors have been reimbursed.
The creditors of Celsius are still currently tied up in bankruptcy proceedings, and could yet be a long time waiting for a return on their money. There are still fears that the cryptocurrency industry is in a venerable condition, especially to influential people who could use and manipulate it to their own gain. Customers were promised returns of up to 17% on deposits with Celsius, which was more than ten times what most banks could offer. The pay-outs were not to be, as those who were paid got their money from the investments of other creditors, and in the end the Ponzi scheme came crashing down, which was long overdue according to many within the industry.
Coffeezilla
Our favourite crypto detective was quick to get his views on the situation across, releasing a video called "Huge Scammer Gets Arrested" which can be found below. Within, Coffeezilla notes his happiness for the news of Mashinsky being arrested. He shows testimonies from victims of the Celsius fraud, where they make it clear they got drawn into a Ponzi scheme without their knowledge. They point to the outrageous claims Celsius and Mashinsky made it their videos and on Twitter, and that Mashinsky along with others involved should face prison time.
Coffeezilla goes through the process of the DOJ, SEC, and FTC being seven counts of fraud against Mashinsky. He also brings up the charges being faced by Celsius's Chief Revenue Officer Roni Cohen-Pavon, who played a role in the company purchasing its own CEL token to inflate the price. Mashinsky is reported to have made $42 milllion from selling his CEL tokens, while Roni made around $3.6 million.
Coffeezilla also lists out a number of the 71 mentions of lies created by Celsius and Mashinsky to ensure customers would continue to deposit money on the platform. Finally, Coffeezilla talks with "Dirty Bubble Media" about how he realised that the platform was a fraud long before anybody else did, and in this interview it shows the darkened history and past of Mashinsky and why he was so untrustworthy.
Have a great day.
CryptoGod-1.
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