The SEC has charged Mashinsky and Celsius with four counts of fraud and one count of offering unregistered securities.
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The SEC is suing bankrupt crypto lender Celsius Network and the firm's former CEO Alex Mashinsky for four counts of fraud and one count of securities violations, per a court filing on Thursday.
Before going under last summer, the platform offered users high-interest rates for depositing their idle crypto via its Earn Interest Program. This program was touted as "safe investment with high returns."
Now, the SEC alleges that Celsius and Mashinsky "misrepresented Celsius’s central business model and the risks to investors by claiming that Celsius did not make uncollateralized loans, the company did not engage in risky trading, and the interest paid to investors represented 80% of the company’s revenue."
The Commission alleges that these claims were false and that this information was "hidden from investors" before Celsius officially filed for bankruptcy in July 2022.
The SEC is demanding that Mashinsky be prohibited from buying, offering, or selling cryptocurrencies, to be disgorged of "all ill-gotten gains in the form of any benefits of any kind derived from the illegal conduct alleged" in the complaint, and for the former CEO pay civil penalties to be determined by the court.
The CFTC is also mulling action against Mashinsky, alleging that he misled investors and should have registered with the regulator, a source said at the beginning of the month.
Elsewhere, the New York Attorney General's office alleged that he misrepresented and concealed the firm's financial condition, among other allegations in its lawsuit from January.
Neither Celsius nor Mashinsky responded immediately to Decrypt's request for comment.
This is a breaking story and will be updated shortly.
