U.S. court freezes assets of Ex-Celsius CEO amid fraud probe

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  • Federal authorities have frozen the financial assets of Alex Mashinsky, the former CEO of cryptocurrency lending platform Celsius.
  • The U.S. District Court for the Southern District of New York unsealed a restraining order on September 5.
  • Celsius has entered into a non-prosecution agreement with the DOJ and is under new management.

Federal authorities have escalated actions against Alex Mashinsky, the embattled former CEO of Celsius (CEL), a once-prominent cryptocurrency lending platform. On September 5, the U.S. District Court for the Southern District of New York unsealed a restraining order that froze Mashinsky’s financial assets.

This move comes as part of an ongoing criminal probe led by the Department of Justice (DOJ) and follows allegations of securities fraud and market manipulation against Mashinsky. The court’s decision has sent ripples through the finance and cryptocurrency communities, shedding light on regulatory scrutiny in the rapidly evolving digital asset sector.

The restraining order, granted upon the DOJ’s request, effectively locks Mashinsky out of numerous financial accounts, including those held at prestigious institutions like Goldman Sachs and Merrill Lynch. The frozen accounts are linked to holding entities that have connections to Mashinsky. The court also ordered freezing of Mashinsky’s accounts at First Republic Securities, SoFi Bank, and SoFi Securities.

In addition to financial accounts, the court ruling extends to real properties. One such asset is a residence in Austin, Texas, which Mashinsky and his spouse Kristine acquired last year. The property, which had been on the market for over a year before the couple’s purchase, was put up for sale almost concurrently with Celsius’s bankruptcy filing in July 2022.

Mashinsky, apprehended in July, has been charged with securities fraud and the manipulation of Celsius’s native digital currency, CEL. His arrest and the ensuing charges stem from his alleged misconduct in portraying Celsius as a secure alternative to traditional banking. Authorities assert that this narrative prompted investors to funnel billions of dollars into the company.

Mashinsky pleaded not guilty to the charges and has secured his release on a $40 million bail. His defense team has dismissed the allegations, calling them “unfounded.” However, according to legal documents, Celsius has entered into a non-prosecution agreement with the DOJ, acknowledging its role in the scheme. As part of its deal to avoid prosecution, the company under new management; a restructuring team, helmed by former JPMorgan Chase banker Chris Ferraro, has taken the reins.

The freezing of Mashinsky’s assets is expected to have far-reaching implications for both the legal case against him and the larger cryptocurrency landscape. It reflects the U.S. government’s intensifying efforts to regulate digital asset platforms and protect investors from potential fraudulent activities. Prosecutors have indicated that they require six to eight weeks to collect further evidence, including the review of web recordings allegedly connected to Mashinsky’s deceptive practices.

With federal agencies displaying heightened vigilance, this case could act as a bellwether for how future legal issues surrounding cryptocurrency companies will be handled. Meanwhile, investors and market observers are closely watching developments, as the unraveling legal saga around Alex Mashinsky could set legal precedents affecting the broader crypto industry in years to come.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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