{"id":35443,"date":"2023-07-14T01:58:24","date_gmt":"2023-07-14T05:58:24","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/celsius-faces-fraud-charges-regulators-try-to-bring-order-to-crypto-wild-west\/"},"modified":"2023-07-14T01:58:26","modified_gmt":"2023-07-14T05:58:26","slug":"celsius-faces-fraud-charges-regulators-try-to-bring-order-to-crypto-wild-west","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=35443","title":{"rendered":"Celsius Faces Fraud Charges. Regulators Try to Bring Order to Crypto Wild West."},"content":{"rendered":"
\n

If there was any doubt that regulators are concerned about possible manipulation in the crypto market, charges unveiled by government agencies against crypto lender Celsius Network just laid them to rest.<\/p>\n

The Securities and Exchange Commission in a complaint early Thursday accused Celsius and then-CEO Alex Mashinsky of various charges, including a multiyear scheme to prop up the value of the company\u2019s internal token, called CEL. <\/p>\n

\n

The Justice Department separately said it had indicted Mashinsky and another executive on related charges. The Commodity Futures Trading Commission and Federal Trade Commission filed their own lawsuits.<\/p>\n

\u201cCelsius and Mashinsky undertook a secret plan to increase artificially CEL\u2019s market price by buying more CEL than they were admitting publicly,\u201d the SEC complaint said. The SEC also said the company\u2019s products were securities that should have been registered with the agency.<\/p>\n

Jonathan Ohring, an attorney representing Mashinsky, told Barron\u2019s<\/em> in an email: \u201cAlex vehemently denies the allegations brought today. He looks forward to vigorously defending himself in court against these baseless charges.\u201d\u00a0<\/p>\n

Celsius in a statement said it had reached an agreement with the SEC and the other agencies, which included an injunction from committing future securities law violations and a $4.7 billion fine from the FTC. The company said the resolutions wouldn\u2019t affect its bankruptcy reorganization plan. <\/p>\n

Celsius Network was once the largest crypto platform offering investors yield in exchange for depositing their tokens with the company. The company at one time paid yields in excess of 10% on some token deposits, saying that it was able to pay such high returns because they could lend the tokens themselves to institutional investors while charging even higher interest. Investors could get paid the yield in the token they deposited or could get a bonus by instead taking CEL, the company\u2019s own token.<\/p>\n

Mashinsky and other company executives on regular \u201cAsk Me Anything\u201d events often touted CEL\u2019s value, \u201cburning\u201d a slug of the token\u2019s issuance which they said supported its value.<\/p>\n

The SEC complaint says that behind the scenes, the company was also buying millions of dollars worth of the token to prop up its value.<\/p>\n

\u201c[O]ur job is to protect CEL,\u201d Mashinsky said in an email, according to the SEC complaint. \u201cThe only way we loose [sic] if CEL price drops a lot and people get nervous and keep selling. We can protect against that scenario.\u201d<\/p>\n

Company employees openly talked about plans to prop up the token, the SEC said. When Mashinsky complained of the price dropping, an employee responded that \u201cThe main problem was that the value was fake and was based on us spending millions,\u201d according to an internal message quoted by the SEC.<\/p>\n

Celsius Network, along with many other crypto lenders, filed for bankruptcy protection during the token market collapse last year, and now depositors are fighting with other creditors for what\u2019s left of their tokens.<\/p>\n

But a larger message for any investors thinking of dabbling in the token market is to take the value of cryptos, and especially smaller tokens like CEL, with a heap of salt.<\/p>\n

Various estimates put the value of the token market at about $1.2 trillion, down from nearly $3 trillion at the 2021 market peak, but the trading platforms that handle most transactions often don\u2019t have the same monitoring for fraud and manipulation as exists in the stock market. Some crypto executives themselves say that the trillion-dollar estimate isn\u2019t believable because of manipulation on exchanges.<\/p>\n

The SEC, other agencies, and lawmakers are bringing enforcement actions or working on rules meant to bring some order to crypto\u2019s Wild West, but for now, token investors are mostly on their own. <\/p>\n

Write to Joe Light at joe.light@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

If there was any doubt that regulators are concerned about possible manipulation in the crypto market, charges unveiled by government agencies against crypto lender Celsius Network just laid them to rest. The Securities and Exchange Commission in a complaint early Thursday accused Celsius and then-CEO Alex Mashinsky of various charges, including a multiyear scheme to […]<\/p>\n","protected":false},"author":1,"featured_media":35444,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-35443","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nCelsius Faces Fraud Charges. 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