Commodity Futures Trading Commission (CFTC) investigators have concluded that the crypto lender is bankrupt Celsius and its former CEO Alex Mashinsky flouted US rules before the company’s implosion, Bloomberg News reported on Wednesday.
Lawyers for the regulator’s law enforcement agency concluded that Celsius misled investors and should have registered with the regulator, the report said, citing people familiar with the matter.
If a majority of CFTC commissioners agree with the conclusion, the agency may file a case in federal court later this month, the report said.
Celsius and the CFTC did not immediately respond to a Reuters request for comment.
Last year’s market turmoil following the collapse of TerraUSD led to the failure of several large crypto companies, including Celsius Network. The company filed for bankruptcy last year, leaving its customers with huge losses.
As part of Celsius’ bankruptcy proceedings, an independent auditor was hired to investigate allegations that Celsius had operated as a Ponzi scheme and to report on how the company had handled crypto assets.
The New York Attorney General earlier this year sued Celsius founder Alex Mashinsky, alleging that he defrauded investors of billions of dollars in digital currency by concealing the poor health of the lending platform.
Before customer withdrawals were frozen and bankruptcy was declared last year, Celsius was one of the largest crypto lending platforms with almost US$25 billion in assets under management (approx. 2,05,900 crore) as of October 2021. By the end of 2021, the company had assets of US$3 billion (approx. 24,700 crore rupees) reached ) rating.
© Thomson Reuters 2023
