In the wake of the U.S. Securities and Exchange Commission (SEC) filing a lawsuit against troubled cryptocurrency lender Celsius, the Federal Trade Commission (FTC) has reached a settlement with the company, imposing a staggering $4.7 billion fine for deceiving consumers. However, the penalty will be temporarily suspended to allow Celsius to return the remaining assets to consumers through the ongoing bankruptcy proceedings.
FTC’s Settlement Puts on Hold as Celsius Works to Return Assets to Consumers in Bankruptcy Proceedings
Celsius, the now-defunct cryptocurrency lender, has been slapped with a significant fine by the FTC for allegedly misleading investors and mishandling billions of dollars in user deposits. While Celsius claimed to possess sufficient assets to protect customer funds, the FTC deemed this assertion false. Consequently, the platform and its associated entities are now prohibited from managing customer assets indefinitely, and charges have been brought against three executives.
According to the FTC, Alexander Mashinsky, former CEO and co-founder of Celsius, along with fellow co-founders Shlomi Daniel Leon and Hanoch “Nuke” Goldstein, will face a federal court trial since they have chosen not to settle the matter out of court. The FTC stressed that these individuals, who held crucial roles within the company, have declined the opportunity for an extrajudicial resolution.
Samuel Levine, the director of the FTC’s Bureau of Consumer Protection, commented, “Celsius touted a new business model but engaged in an old-fashioned swindle. Today’s action, which bans Celsius from handling people’s money and holds its executives accountable, sends a clear message that emerging technologies are not exempt from the law.”
The FTC’s complaint against Celsius follows the SEC’s lawsuit against the bankrupt crypto lender. The SEC’s legal action, filed just an hour before the FTC’s press release, alleges that “Defendants made numerous false and misleading statements to induce investors to purchase CEL and invest in the Earn Interest Program.” Celsius, along with former CEO Mashinsky, is named as a defendant in this specific litigation brought forth by the U.S. securities watchdog.
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Frequently Asked Questions (FAQs) about crypto lender
What is the reason behind the $4.7 billion fine imposed on Celsius by the FTC?
The FTC imposed a $4.7 billion fine on Celsius due to allegations of deceiving consumers and mishandling deposits, which included misleading statements about the company’s ability to protect customer funds.
Will Celsius be able to keep its remaining assets despite the fine?
No, the penalty will be deferred, allowing Celsius to return its remaining assets to consumers through the ongoing bankruptcy proceedings.
What are the consequences for Celsius and its executives?
Celsius and its affiliated entities are indefinitely barred from managing customer assets, and charges have been brought against three executives. Alexander Mashinsky, former CEO and co-founder, along with his fellow co-founders, Shlomi Daniel Leon and Hanoch “Nuke” Goldstein, will face a federal court trial as they have not reached a settlement with the FTC.
What other legal action is Celsius facing?
In addition to the FTC’s complaint, Celsius is also named as a defendant in a lawsuit filed by the U.S. Securities and Exchange Commission (SEC). The SEC alleges that Celsius made false and misleading statements to induce investors to purchase CEL and invest in the Earn Interest Program.
How does the FTC view this case in relation to emerging technologies?
The FTC’s director of the Bureau of Consumer Protection, Samuel Levine, stated that Celsius engaged in an “old-fashioned swindle” despite touting a new business model. The action taken by the FTC sends a clear message that emerging technologies, including cryptocurrencies, are not exempt from the law.
More about crypto lender
- FTC Press Release
- SEC Lawsuit against Celsius
- Celsius Website
- U.S. Securities and Exchange Commission (SEC) Website