The former CEO of cryptocurrency lending platform Celsius Network, Alex Mashinsky, has been arrested on federal fraud charges.
Mashinsky is charged with securities fraud, wire fraud and commodities fraud, accused of defrauding customers and misleading them about Celsius’ business.
In addition, Mashinsky and the company he founded are facing lawsuits from the Securities and Exchange Commission and the Commodity Futures Trading Commission.
An indictment unsealed on Thursday says: "Mashinsky portrayed Celsius as a modern-day bank, where customers could safely deposit crypto assets and earn interest.
“In truth, however, Mashinsky operated Celsius as a risky investment fund, taking in customer money under false and misleading pretenses and turning customers into unwitting investors in a business far riskier and far less profitable than what Mashinsky had represented.”
Mashinsky pleaded not guilty and has been released on a $40 million bond.
Celsius filed for bankruptcy and suspended customer withdrawals last July, citing a $1.19 billion deficit on its balance sheet. Mashinsky quit as CEO in September.