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Founder of bankrupt crypto firm Celsius arrested on fraud charges

Alex MashinskyFounder and former Chief Executive of Bankruptcy cryptocurrency firm CelsiusHe was arrested Thursday and charged with fraud, federal prosecutors said.

Mr. Mashinsky was also sued by the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Federal Trade Commission. Under an agreement with the FTC, Celsius The company agreed to pay $4.7 billion in compensation to customers, although the process of paying that total was suspended until the bankruptcy filing.

Mr. Mashinsky was arrested at his home in New York, said a person close to the investigation. The charges against him include wire fraud, commodity fraud and manipulation of securities prices.

Before collapsing last year, Celsius rose to prominence as a crypto bank of sorts, promising customers exorbitant interest rates and managing billions of dollars in deposits. As its charismatic pitchman, Mr Mashinsky appeared in YouTube videos where he claimed Celsius was a safer, more egalitarian alternative to traditional banks.

At its peak, Celsius controlled approximately $25 billion in crypto assets. But last summer, amid a widespread explosion in crypto markets, Celsius collapsed and filed for bankruptcy. In the process it wiped out more than 500,000 of its customers, many of whom lost their savings.

Authorities said the company and Mr. Mashinsky repeatedly lied to investors about its business model and how it made money. He even lied about the number of his clients and misinformed investors that their deposits were insured.

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