Celsius was one of the top lenders in the crypto ecosystem during the bull market in 2021. At its peak, it served 1.7 million customers and managed $25 billion in assets.
All that came crashing down in June 2022 amid major flaws in the company’s working structure.
The bear market in 2022, especially the Terra ecosystem implosion in May, exposed Celsius’ fragile business model, which was highly dependent on its native CEL (CEL) token and the high staking rewards it offered.
The price of CEL fell dramatically in June after the crypto lenders’ relationship with Terra became public, followed by Celsius sending huge amounts of funds off the platform and pausing user withdrawals.
Just a month later, on July 14, the troubled firm filed for Chapter 11 bankruptcy. At the time of the filing, it had roughly $2.7 billion in debt.
On June 16, 2022, securities regulators from five U.S. states opened an investigation into Celsius. The company’s former CEO, Alex Mashinsky, ultimately stepped down from his position on Sept. 27 amid rumors he was attempting to flee the United States.
By the end of 2022, the U.S. Justice Department, Commodity Futures Trading Commission (CFTC), Federal Trade Commission (FTC), and Securities and Exchange Commission had all begun investigating Celsius’ collapse and Mashinsky’s role in it.
Mashinsky faces criminal charges
The first significant blow for the troubled crypto lender came on July 5, 2023, when the CFTC concluded its investigation and alleged Celsius and Mashinsky had violated several U.S. regulations and misled investors.
On July 13, the SEC filed a complaint against Celsius and Mashinsky, accusing them of violating securities laws by raising billions of dollars through unregistered and fraudulent offers. The FTC also fined Celsius $4.7 billion and ceased its trading operations.
On the same day, the Justice Department charged the former CEO with “securities fraud, commodities fraud, and wire fraud for defrauding customers and misleading them about core aspects of the company he founded.”
Celsius’ former chief revenue officer, Roni Cohen-Pavon, and Mashinsky are “further charged with conspiracy, securities fraud, market manipulation, and wire fraud for illicitly manipulating the price of CEL, Celsius’s proprietary crypto token, all while secretly selling their own CEL tokens at artificially inflated prices.”
Damian Williams, the United States attorney for the Southern District of New York, said that his office is not…
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