While the crypto market rejoices in the historic win of Ripple/XRP over the SEC, luck seemed to have run out for Alex Machinsky, former CEO of the bankrupt crypto lender Celsius, who now faces a maximum sentence of 115 years for the multi-billion dollar fraud. Per the DOJ indictment, which was unsealed on July 13, Machinsky has been indicted on seven criminal counts, including securities fraud, commodities fraud, and wire fraud.
Celsius’s former chief revenue officer, Roni Cohen-Pavon, was charged with four criminal counts. The DOJ accused Mashinsky and Cohen-Pavon of orchestrating “a years-long scheme to mislead customers” on the market value of the company’s value and interest in the native token CEL. The indictment was followed by separate lawsuits filed by three federal regulatory agencies: the U.S. Securities and Exchange Commission [SEC], the Commodity Futures Trading Commission [CFTC], and the Federal Trade Commission [FTC].
Mashinsky, 57, showed up for his appearance in federal court in Manhattan without shackles, wearing a gray polo shirt and trousers. He will be freed on a $40 million bond, which will be guaranteed by his Manhattan home, according to U.S. Magistrate Judge Ona Wang.
Crypto Expert Warns Next Cycle Would Be The Last To Set Things Right Before CBDC Takeover
The top exec joins the likes of former FTX CEO SBF and Terra-Luna mogul Do Kwon, all of whom are now seen as ‘bad actors from the last cycle’. According to Alex Valaitis, founder of the web3 consulting firm W3T, the crypto cleanse is almost complete, referencing the slew of high-profile arrests of major industry players.
While I am generally not a fan of government intervention in crypto, the truth is that NONE of these guys stayed true to the ethos of crypto. Ultimately, it will be up to the collective crypto community to decide where we go from here… Will we embrace the foundations of crypto or will we fall back into the same trap? All I know is that we are running out of time to get things right. This next cycle will likely be the last one before there are mainstream CBDCs.
For Celsius Network and its ex-founder, the most recent litigation is just the latest in a string of difficulties. Mashinsky was sued in January with a similar fraud claim by the attorney general of New York State. Since the SEC sued crypto exchanges Binance and Coinbase Global last month, the cryptocurrency market has been even more precarious, increasing the likelihood of additional regulatory issues for the sector.