According to a report by Bloomberg News on July 5, investigators from the Commodity Futures Trading Commission (CFTC) have concluded that Celsius, a bankrupt crypto lender, and its former CEO Alex Mashinsky violated U.S. regulations prior to the company’s collapse.
Sources familiar with the matter stated that attorneys in the CFTC’s enforcement unit found evidence that Celsius had misled investors and should have registered with the regulatory body.
If the majority of the CFTC’s commissioners concur with this determination, the agency may initiate legal proceedings in federal court as early as this month.
Neither Celsius nor the CFTC provided an immediate response when approached by Reuters for comment.
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The downfall of TerraUSD last year triggered market turmoil that resulted in the failure of numerous prominent cryptocurrency companies, including Celsius Network.
As a consequence, the company filed for bankruptcy, leaving its clients with substantial losses.
As part of Celsius’ bankruptcy proceedings, an independent examiner was appointed to investigate allegations that the firm had functioned as a Ponzi scheme.
The examiner’s task was to scrutinize how Celsius had managed its cryptocurrency assets and produce a report on their findings.
Earlier this year, the Attorney General of New York filed a lawsuit against Alex Mashinsky, the founder of Celsius.
The lawsuit alleged that Mashinsky had defrauded investors of billions of dollars in digital currency by concealing the deteriorating state of the lending platform.
These developments underscore the challenges and risks associated with the crypto industry.
Regulatory bodies such as the CFTC play a crucial role in ensuring compliance and protecting investors from potential misconduct.
The outcome of the CFTC’s investigation and any subsequent legal action will shed further light on the alleged wrongdoing by Celsius and its former CEO.
