Insolvent crypto loan platform Celsius could be in for more trouble. Investigators from the Commodity Futures Trading Commission [CFTC] have accused the firm of scamming investors out of billions of dollars.
In a recent Bloomberg article citing familiar sources, lawyers in the enforcement section came to the conclusion that Celsius had deceived investors, should have registered with the regulator, and that former CEO Alex Mashinsky had also broken the law.
If the majority of CFTC commissioners concur with the investigators’ conclusions, the organization might even bring legal action against the now-defunct crypto lender this month.
The US agency that oversees the derivatives market would take a final call this month on whether to bring the lawsuit.
The latest probe from the CFTC investigators is yet another regulatory action that has been taken against the now-defunct crypto lending site. Federal prosecutors in Manhattan and the SEC are also conducting their respective investigations.
New York attorney Letitia James, who filed suit against CEO, and founder Alex Mashinsky a few months back tweeted yesterday that he lied to people about the risks of investing in Celsius, hid its deteriorating financial condition, and failed to register in New York.
On January 5, the New York Attorney General filed a lawsuit against Mashinsky, claiming the former CEO had deceived investors and caused losses of billions of dollars.
Celsius Served Fraud Suit By New York State
The suit alleged Mashinsky “told investors that Celsius would generate sustainably high returns by making low-risk collateralized loans to first-tier institutions and cryptocurrency exchanges as well as overcollateralized loans to retail borrowers.”
The lawsuit claimed that as the company expanded, ”it struggled to generate enough revenue to pay the promised yields on investors’ deposits. In search of revenue, Celsius moved into significantly riskier investments, extending hundreds of millions of dollars in uncollateralized loans, and investing hundreds of millions of dollars in unregulated decentralized finance platforms.”
Following a recent court order to sell them for Bitcoin [BTC] and Ethereum [ETH], the New Jersey-based firm traded over $70 million worth of altcoins on July 5.
Per Arkham Intelligence, Celsius holds crypto assets worth $614.28 million in its wallets.