CEL Token Price Drops as Celsius Network and Former CEO Found Guilty

12:56 pm
July 6, 2023

A recent investigation by the United States Commodity and Futures Trading Commission (CFTC) has revealed that Celsius Network, a cryptocurrency lender, and its former CEO, Alex Mashinsky, violated several regulations before the company collapsed. As a result of this revelation, the price of the native cryptocurrency of Celsius, CLE, has dropped by 10%.

Background: New York Attorney General Lawsuit

Following the downfall of Celsius Network, the New York Attorney General, Letitia James, filed a lawsuit against the company. The attorney general alleged that Mashinsky provided false information about the financial status of the company and made misleading claims about its security measures. The lawsuit accuses Mashinsky of defrauding millions of investors, including over 26,000 residents of New York.

The Decline of Celsius

Celsius Network gained popularity in 2017 and gained traction during the Covid-19 pandemic by offering attractive interest rates for cryptocurrency deposits and loan services. Mashinsky promoted the platform as a low-risk alternative to traditional banks. However, the collapse of Terra’s algorithmic stablecoin UST and a downturn in the cryptocurrency market severely impacted Celsius Network’s operations.

After initially denying losses following the Terra Luna collapse, Celsius faced a wave of customer withdrawals. In June 2022, withdrawals were frozen, and the company filed for bankruptcy protection a month later. Additionally, the Securities and Exchange Commission (SEC) and federal prosecutors in Manhattan are investigating Celsius in relation to its bankruptcy filings.

In March of this year, Celsius was allowed to resume withdrawals, and in June, the company was authorized to convert its altcoin holdings into Bitcoin (BTC) and Ethereum (ETH).

FAQs

1. What is Celsius Network?

Celsius Network is a cryptocurrency lender that provides interest-earning accounts, loans, and other financial services for crypto assets.

2. What is CLE?

CLE is the native cryptocurrency of Celsius Network. It is used within the Celsius ecosystem for various purposes such as rewards, loan repayments, and more.

3. What were the findings of the CFTC investigation?

The CFTC investigation found that Celsius Network and its former CEO violated US laws, including deceiving investors and failing to register with the commission.

4. What are the consequences of the investigation?

As a result of the investigation, the CFTC may file a lawsuit in federal court against Celsius Network and its former CEO.

5. How has the price of CEL token been affected?

The price of CEL token has dropped by 10% following the CFTC’s findings and the disclosure of Celsius Network’s wrongdoing.

6. What other investigations are ongoing?

The Securities and Exchange Commission (SEC) and federal prosecutors in Manhattan are also investigating Celsius Network in relation to its bankruptcy filings.

7. Are Celsius withdrawals currently available?

Yes, Celsius withdrawals have been allowed to resume since March of this year.

8. What cryptocurrencies can Celsius convert its altcoin holdings into?

Celsius has been authorized to convert its altcoin holdings into Bitcoin (BTC) and Ethereum (ETH).

9. Did Celsius deny incurring losses after the collapse of Terra Luna?

Initially, Celsius denied incurring losses after the collapse of Terra Luna but faced a wave of customer withdrawals that led to frozen withdrawals and eventual bankruptcy protection.


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