CEL falls after Celisus Network and its former CEO found guilty

CEL falls after Celisus Network and its former CEO found guilty

By Charles Thuo - min read
  • The United States Commodity and Futures Trading Commission (CFTC) has concluded investigations into Celsius Network.
  • The CFTC has found the former CEO and Celsius Network guilty of breaking several rules before the company collapsed.
  • The price of CLE, the native cryptocurrency of Celsius has lost 10% in value after the revelation.

After investigations, the United States Commodity Futures Trading Commission (CFTC) has concluded that cryptocurrency lender Celsius Network and its former CEO Alex Mashinsky broke US laws before it collapsed. 

According to the CFTC report, the findings indicate that Celsius deceived investors and neglected to register with the CFTC. The CFTC may file a lawsuit in federal court within the month if the majority of its commissioners concur with these findings.

New York Attorney General already sued Celsius

Letitia James, the attorney general of New York, has already filed a lawsuit following the demise of Celsius Network. James alleged that Mashinsky misrepresented the company’s financial situation and made false claims about the platform’s security.

James’ lawsuit charges Mashinsky with defrauding millions of investors, including more than 26,000 residents of New York, in a lawsuit that was filed in January. It states that Mashinsky made “false and misleading representations” in order to persuade clients to deposit enormous sums of money with the crypto lender.

What really happened to Celsius?

Celsius was founded in 2017 and it shot into the limelight during the Covid-19 pandemic when it introduced loan offerings and tempting interest rates for cryptocurrency deposits.

Mashinsky frequently presented these products as less risky options compared to those provided by conventional banks. However, the Celsius market boom did not last long since the demise of Terra’s algorithmic stablecoin UST and a slump in the cryptocurrency market had disastrous effects on its business.

Although Celsius initially denied making losses after the Terra Luna collapse, it faced a wave of customer withdrawals. Withdrawals were eventually frozen in June 2022, and a month later, bankruptcy protection was sought.

The Securities and Exchange Commission (SEC) and federal prosecutors in Manhattan are, however, also looking into Celsius in accordance with its bankruptcy filings.

In March this year, the court allowed Celsius withdrawals to resume and in June the crypto lender was allowed to convert its altcoin holdings into Bitcoin (BTC) and Ethereum (ETH).