• The US Commodity Futures Trading Commission (CFTC) has closed its investigation into the Celsius network.
  • The CFTC found the former CEO and Celsius Network guilty of violating several rules before the company’s bankruptcy.
  • The price of CLE, Celsius’ native cryptocurrency, fell 10% in value after the revelation.

As a result of its investigation, the U.S. Commodity Futures Trading Commission (CFTC) has concluded that cryptocurrency financier Celsius Network and its former CEO Alex Mashinski violated U.S. law prior to their bankruptcy.

The CFTC report said the findings show that Celsius deceived investors and failed to register with the CFTC. The CFTC could file suit in federal court later this month if a majority of its commissioners agree with these findings.

New York Attorney General Has Already Charged Mr. Celsius

New York State Attorney General Letitia James has already filed a lawsuit following the demise of the Celsius Network. James alleged that Mashinsky misrepresented the company’s financial position and made false claims about the platform’s security.

James’ lawsuit accuses Mashinsky of defrauding millions of investors, including more than 26,000 New Yorkers, in a lawsuit filed in January. According to the report, Mashinsky made “false and misleading statements” to persuade customers to deposit large sums of money with cryptocurrency lenders.

What happened to Celsius?

Founded in 2017, Celsius rose to prominence during the COVID-19 pandemic by introducing loan products and attractive interest rates for crypto deposits.

Mashinsky frequently presented these products as a lower-risk option compared to what traditional banks offer. However, the boom in the Celsius market did not last long, as the demise of Terra’s algorithmic stablecoin UST and the slump in the cryptocurrency market had a disastrous effect on the company’s business.

Celsius initially denied losses after the Terra Luna bankruptcy, but faced a wave of customer withdrawals. Withdrawals were eventually frozen in June 2022, and bankruptcy protection was filed a month later.

But the Securities and Exchange Commission (SEC) and federal prosecutors in Manhattan are also investigating Celsius under bankruptcy filings.

In March of this year, a court allowed Celsius to resume withdrawals, and in June it allowed crypto lenders to convert their altcoin holdings into Bitcoin (BTC) and Ethereum (ETH).

By Jules

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