The U.S. Securities and Exchange Commission (SEC) has taken legal action against the now-insolvent cryptocurrency lending platform, Celsius. The lawsuit, lodged on Thursday, implicates former CEO Alexander “Alex” Mashinsky. Both parties are charged with misleading investors by guaranteeing a secure investment yielding high returns.
Bankrupt Celsius Crypto Lender Under Fire from SEC for Deceiving Investors
The SEC has lodged a lawsuit in New York against the bankrupt cryptocurrency lender, Celsius. The commission accuses Celsius and its former CEO of perpetuating a fraud through its “Earn Interest Program.” The SEC asserts that Celsius provided a false portrayal of its business’s financial health.
The SEC maintains that the defendants’ intricate scheme began unraveling in June 2022, rendering investors unable to withdraw billions of dollars worth of cryptocurrency assets from Celsius’s online platform. “The defendants issued numerous deceptive statements to persuade investors to buy CEL and partake in the Earn Interest Program,” discloses the SEC lawsuit.
The legal action against Celsius is in line with similar proceedings initiated against Binance and Coinbase. The SEC also divulged it resolved charges against RSE Markets Inc. on July 12 for operating as an unregistered exchange. The court document suggests that Celsius engaged in hazardous trading activities and issued unsecured loans in a bid to generate the required revenue, consequently exposing the entire Celsius operation to considerable risk. The SEC complaint declares:
Celsius executives falsified the company’s financial success to present a more prosperous and stable image than reality.
The SEC lawsuit comes as Celsius is nearing the end of its Chapter 11 process. The company’s mining division is currently undergoing restructuring, and liquidators have shared plans to sell certain altcoins on the open market. The SEC also alleges that Celsius falsely inflated its client count, professing to have 1 million clients when in reality, the company had 500,000 registered customers, a significant portion of whom were inactive.
We welcome your thoughts on the SEC’s lawsuit against Celsius. Please share your views and opinions on this matter in the comments section below.
Frequently Asked Questions (FAQs) about SEC Lawsuit Against Celsius
What is the SEC lawsuit against Celsius?
The SEC (U.S. Securities and Exchange Commission) has filed a lawsuit against Celsius, a bankrupt cryptocurrency lender, and its former CEO. The lawsuit accuses them of deceptive practices, including misleading investors and engaging in risky trading.
What are the allegations made by the SEC?
The SEC alleges that Celsius made false promises to investors, offering a safe investment with high returns through its “Earn Interest Program.” They claim that Celsius misled investors about the financial success of its business and engaged in risky trading practices and uncollateralized loans.
How did Celsius’s scheme collapse?
According to the SEC, Celsius’s complex scheme began to collapse in June 2022, leaving investors unable to withdraw billions of dollars in cryptocurrency assets from Celsius’s online platform. This led to the exposure of fraudulent statements made by Celsius to induce investors into purchasing their digital token (CEL) and participating in their Earn Interest Program.
What is the significance of the SEC lawsuit?
The SEC’s lawsuit against Celsius is part of a broader crackdown on deceptive practices in the cryptocurrency industry. It follows similar actions taken against other prominent platforms like Binance and Coinbase. The SEC aims to protect investors and ensure transparency and compliance within the crypto market.
What impact does this lawsuit have on Celsius?
The lawsuit comes at a challenging time for Celsius, as the company is already going through a Chapter 11 bankruptcy process. The legal action further complicates their situation, potentially affecting the ongoing restructuring of their mining division and the planned sale of specific altcoins.
How did Celsius misrepresent its customer count?
The SEC alleges that Celsius falsely claimed to have 1 million clients when, in reality, they only had 500,000 registered customers. Additionally, a significant number of these customers were inactive, which suggests a misrepresentation of the actual user base.
Please note that this information is based on the provided text and may not reflect the latest updates on the case.
More about SEC Lawsuit Against Celsius
- U.S. Securities and Exchange Commission (SEC)
- SEC Lawsuit Against Celsius (Please note that this link is a placeholder and should be replaced with an actual reference link to the relevant news or official SEC announcement)