Ex-CEO of Celsius is charged with fraud

NEW YORK — The founder and former CEO of the failed cryptocurrency lending platform Celsius Network was arrested Thursday on federal fraud charges alleging he defrauded customers by misleading them about key aspects of the business.

Alexander Mashinsky, 57, of Manhattan, is charged with securities, commodities and wire fraud in an indictment unsealed in Manhattan federal court. He is also charged with illegally manipulating the price of Celsius’s proprietary crypto token while secretly selling his own tokens at inflated prices.

According to the indictment, Mashinsky from 2018 to 2022 pitched Celsius to customers as a modern-day bank where they could safely deposit crypto assets and earn interest.

But it says Mashinsky operated Celsius like a risky investment fund, taking in customer money under false and misleading pretenses and exposing customers to a high-risk business.

The indictment alleges that Mashinsky promoted Celsius through media interviews, his Twitter account and Celsius’s website, along with a weekly “Ask Mashinsky Anything” session broadcast posted to Celsius’s website and YouTube channel.

Celsius employees who noticed false and misleading statements in the sessions warned Mashinsky, but they were ignored, the indictment states.

Mashinsky’s false portrayal of Celsius as a safe and secure institution caused its customer base to grow exponentially through a large number of retail investors, the indictment says.

By fall 2021, Celsius had become one of the largest crypto platforms in the world, purportedly holding $25 billion in assets, it says. Celsius filed for bankruptcy last year.