Former CEO of bankrupt digital asset lender Celsius Network, Alex Mashinsky, who is facing seven criminal charges from the U.S. Department of Justice (DOJ), has had his assets frozen.
A recent court order shows the U.S. DOJ has ordered multiple bank accounts, financial institutions, and a home of Alex Mashinsksy, the founder and former CEO of bankrupt digital asset lender Celsius Network LLC, to be frozen.
Judge Jed Rakoff of the U.S. District Court for the Southern District of New York ordered Mashinksy’s “property and other interests” to be “restrained,” and that no money should be able to leave bank accounts linked to him at Goldman Sachs (NASDAQ: GS), Merrill Lynch (NASDAQ: MER.PRK), First Republic Securities, SoFi Bank, and SoFi Securities.
Mashinsky was arrested on July 13 and charged by federal prosecutors with seven criminal counts, including securities fraud, commodities fraud, and wire fraud.
“This case, like the others my Office has recently announced alleging fraud in the crypto economy, may appear complicated. But 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. And we’ll be here to catch it,” said Attorney Damian Williams when the charges were announced.
And it’s not just a criminal case that Mashinksy is facing. The DOJ charges coincided with a string of civil suits filed the same day against Celsius and its former CEO by the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and Federal Trade Commission (FTC).
The SEC filed its lawsuit with the U.S. District Court for the Southern District of New York on several different fraud and misrepresentation accusations, as well as one count of the unregistered sale of securities.
The CFTC charged Mashinsky and Celsius Network with fraud and material misrepresentations, specifically the false touting of high profits and security to induce customers to deposit their digital asset commodities on the platform.
In the third civil suit to be filed on July 13, and thus far the only one to be settled, the FTC alleged that Celsius Network and Mashinsky “duped consumers” and made misrepresentations to the market. The FTC announced a settlement with Celsius later the same day, which included a $4.7 billion fine and a ban from offering, marketing, or promoting any product or service that could be used to deposit, exchange, invest, or withdraw any assets.
All these actions stem from the collapse of Celsius on June 12, 2022, when it announced it was halting all customer withdrawals from the platform, leaving hundreds of thousands of customers unable to access their funds. A month later, on July 13—a year to the day before the various civil and criminal cases were announced—the digital asset lender filed for Chapter 11 bankruptcy.
In July, Mashinsky was released on a $40 million bond under a deal with the DOJ that saw him restricted from traveling and opening any new bank or digital asset accounts. He “vehemently denies” the charges.
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