SEC Charges Celsius Network Limited and Founder Alex Mashinsky with Fraud and Unregistered Offer and Sale of Securities

On July 13, 2023, the Securities and Exchange Commission (SEC) charged Celsius Network Limited (Celsius) and its founder and former CEO, Alex Mashinsky, with violating registration and anti-fraud provisions of the federal securities laws.

The SEC alleged that Celsius failed to register the offers and sales of its crypto lending product, the Earn Interest Program, and made false and misleading statements to investors about the program and its own crypto asset security, CEL. The SEC also alleged that Celsius and Mashinsky engaged in market manipulation by artificially inflating the price of CEL.

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The SEC’s complaint seeks injunctions against future securities law violations and an injunction that prohibits Mashinsky from participating in the purchase, offer, or sale of any crypto asset securities. The complaint also seeks to bar Mashinsky from acting as an officer or director of a public company and seeks monetary relief in the form of civil penalties, disgorgement of profits, and prejudgment interest.

Celsius is cooperating with the SEC and has consented to the relief requested in the complaint, which includes a permanent injunction against future securities law violations.

In parallel actions, the U.S. Attorney’s Office for the Southern District of New York today announced charges against Mashinsky and a non-prosecution agreement with Celsius, and the Commodity Futures Trading Commission (CFTC) today announced charges against Celsius and Mashinsky.

The SEC’s charges against Celsius and Mashinsky are the latest in a series of enforcement actions against crypto lending platforms. In recent months, the SEC has also charged BlockFi and Voyager Digital with failing to register their crypto lending products.

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