The American market regulator FTC fined the American crypto bank Celsius, which was declared bankrupt in 2022, on Thursday for the equivalent of 4.2 billion euros. That reports the consumer watchdog, which accuses three (former) Celsius executives of “defrauding consumers”. The company should never again handle money matters for customers.
The fine follows shortly after the arrest of Alex Mashinsky, the former CEO of the bankrupt crypto company. Police arrested him on Thursday after an investigation by the US stock exchange authority SEC into the collapse of his company. Mashinsky allegedly falsely transferred consumer cryptocurrencies to his platform, promising that deposits would be safe and always available. This turned out not to be the case at all: according to SEC, Celsius made very risky investments without disclosing them to the world. The bank also froze all consumer assets in June 2022.
Court case
The crypto bank also claimed that the interest paid to investors was 80 percent of its revenue. In reality, this turned out to be a much lower percentage. The SEC filed a lawsuit against Mashinsky, who resigned as Celsius’s CEO last September, because of all the false claims.
Read also: 2022 was a disaster year for the crypto world
Celsius is one of many compromised crypto companies. The company gained popularity by paying high interest rates on crypto investments. But partly due to the collapse of the cryptocurrency market in 2022, huge shortages arose. As a result, all 1.7 million customers could no longer withdraw their credits from the ‘bitcoin bank’. At the time, the bank called that “the most responsible action we can take to protect our community.” A month after the freeze, Celsius filed for bankruptcy. The company then had a deficit of 1.09 billion euros.
SEC also sued Binance, the largest crypto trading venue, in recent weeks. The exchange regulator accuses Binance of cheating to circumvent the rules and avoid scrutiny. Among other things, Binance is said to have artificially inflated its trading volumes, mishandled customer money and failed to ban US customers from the platform.