Image source: New York post
In a shocking turn of events, Alex Mashinsky, the former CEO of the now-defunct Celsius crypto lending company, and Roni Cohen-Pavon, the company’s chief revenue officer, have been arrested on charges of committing securities fraud. This development comes after an investigation conducted by the Justice Department, which revealed a series of illicit activities carried out by Mashinsky and Cohen-Pavon.
According to Bloomberg, the Justice Department unsealed charges against the former executives, accusing them of inflating the price of Celsius’ crypto token, CEL, while deceiving customers about the true nature of the token, their actions, and the overall health of the company. The Department alleges that Mashinsky and Cohen-Pavon engaged in fraudulent practices to manipulate the price of CEL, leading unsuspecting investors to purchase the token at inflated prices.
The DOJ claims that despite Mashinsky assuring Celsius customers that he was not selling his tokens, he actually profited immensely from the scheme. Mashinsky is alleged to have made approximately $42 million from the sale of his tokens, while Cohen-Pavon is accused of pocketing $3.6 million.
The charges against the former executives are supported by evidence, including a WhatsApp conversation from October 2021, cited by the DOJ, where Cohen-Pavon discusses the declining value of CEL despite new users joining Celsius. In the conversation, Cohen-Pavon admits, “The issue is that people are selling, and no one is buying except for us. The main problem was that the value was fake and was based on us spending millions just to keep it where it is.”
In response to this admission, prosecutors reveal that Mashinsky compared the situation to other popular tokens like Dogecoin and $SB for Solana, implying that the perceived value of these tokens drives their demand. This exchange underscores the alleged manipulation and deceit practiced by Mashinsky and Cohen-Pavon.
Furthermore, the Justice Department accuses the former Celsius executives of misleading customers by portraying Celsius as a safe platform to store crypto assets and earn interest. However, the investigation alleges that Mashinsky operated Celsius as a risky investment fund, exploiting customers by taking their money under false pretenses.
The arrest of Alex Mashinsky and Roni Cohen-Pavon sends shockwaves through the crypto community, as Celsius was once regarded as a promising player in the crypto lending space. The fallout from these charges will likely raise questions about the integrity of the industry and the need for stricter regulations to protect investors from fraudulent activities.
As the legal proceedings unfold, the Justice Department is expected to present additional evidence supporting its allegations against Mashinsky and Cohen-Pavon. The outcome of this case could have far-reaching implications for the crypto industry, as authorities seek to crack down on fraudulent practices and ensure the protection of investors in this rapidly evolving market.
Source: TheVerge
