Over the past year, the cryptocurrency lending platform Celsius Network has experienced a series of events leading to its collapse and the arrest of its former CEO, Alex Mashinsky. This timeline provides an overview of the key events surrounding Celsius and Mashinsky’s legal troubles.

Summary

Celsius Network, founded in 2017, grew to become a popular platform with over 1.7 million customers and $25 billion in assets under management. However, the platform’s leveraged trading practices and a crypto market downturn exposed its instability.

In June 2022, Celsius announced a pause on all withdrawals, leaving depositors uncertain about the fate of their assets. The situation worsened when Celsius filed for Chapter 11 bankruptcy in July 2022, with reports suggesting the platform had $2.8 billion in debt.

Mashinsky resigned as CEO in September 2022, and by the end of the year, he and Celsius were facing an indictment from the U.S. Justice Department for multiple charges related to fraud.

In early 2023, the New York attorney general filed a lawsuit against Mashinsky, followed by civil cases from the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC). The FTC fined Celsius $4.7 billion for alleged misconduct.

Mashinsky pleaded not guilty to all charges and is currently out on a $40 million bond, while Celsius continues its bankruptcy proceedings.

Timeline of Events

2017-2021: Rise of Celsius Network

– Celsius Network is founded in 2017 and grows to have over 1.7 million customers and $25 billion in assets under management.

Early 2022: Crypto Market Downturn

– The price of the Celsius (CEL) token drops amid stablecoin depegging and the fall of Terra.

June 2022: Withdrawal Pause

– Celsius announces a pause on all withdrawals to improve its withdrawal obligations, without providing a timeline.

July 2022: Chapter 11 Bankruptcy Filing

– Celsius files for Chapter 11 bankruptcy, leaving depositors uncertain about their assets.

September 2022: Mashinsky Resigns

– Alex Mashinsky resigns as CEO, citing distractions and users facing financial difficulties.

End of 2022: Indictment and Sealed Proceedings

– The U.S. Justice Department has an indictment against Mashinsky, Celsius, and former chief revenue officer Roni Cohen-Pavon for fraud charges.

January 2023: Lawsuit and Civil Cases

– The New York attorney general files a lawsuit against Mashinsky for making false and misleading statements. The CFTC and SEC later announce civil cases against Mashinsky and settlements with Celsius.

Frequently Asked Questions (FAQ)

1. What is Celsius Network?

Celsius Network is a cryptocurrency lending platform founded in 2017. It allows users to earn interest on their crypto assets or borrow against them.

2. Why did Celsius Network collapse?

Celsius Network faced instability due to leveraged trading practices and the crypto market downturn. This led to a pause on withdrawals and eventually the filing for Chapter 11 bankruptcy.

3. What are the charges against Alex Mashinsky?

Alex Mashinsky, the former CEO of Celsius Network, is facing multiple charges related to fraud. The U.S. Justice Department, along with other regulatory bodies, has filed criminal and civil cases against him.

4. What is the current status of Celsius Network?

Celsius Network is currently undergoing bankruptcy proceedings. The platform’s debtors have expressed satisfaction with the resolution of cases with federal regulators.

5. What penalties did Celsius Network face?

The Federal Trade Commission (FTC) fined Celsius Network $4.7 billion for alleged misconduct, including squandering user deposits and misleading users.

6. What is the current legal situation of Alex Mashinsky?

Alex Mashinsky has pleaded not guilty to all charges and is out on a $40 million bond. He is restricted from traveling unless under special circumstances.

7. Are there any other notable individuals in the crypto space facing legal troubles?

Yes, former FTX CEO Sam Bankman-Fried and Terra co-founder Do Kwon are also facing legal charges related to fraud.

Sources

Cointelegraph: Everything that’s happened with Celsius and Alex Mashinsky so far