Alex Mashinsky Built Celsius Into a House of Cards

The list of alleged lies from former Celsius Network Chief Executive and co-founder Alex Mashinsky is long. And if the lawsuits filed by multiple U.S. agencies Thursday are to be believed, Mashinsky’s campaign of deception – intended to entice users to treat the now bankrupt crypto lending firm like a bank – started at the very beginning.

Mashinsky, along with Celsius’ ex-chief revenue officer Roni Cohen-Pavon, were arrested Thursday, charged with fraud by the U.S. Department of Justice (DOJ). The company is also being sued for violating finance laws by the U.S. Securities and Exchange Commission and misleading investors by the U.S. Commodity Futures Trading Commission (CFTC), among other charges.

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In total the DOJ charged Mashinsky on seven counts, including securities, commodities and wire fraud and several conspiracy-related allegations. The Federal Trade Commission (FTC), which sued Celsius for a litany of material misrepresentations, announced it settled with the company in a deal that will “permanently ban it from handling consumers’ assets.” Mashinsky, along with former executives Shlomi Daniel Leon and Hanoch “Nuke” Goldstein, did not agree to the $4.7 billion FTC settlement (one of the largest in FTC history).

Celsius, founded during the initial coin offering (ICO) boom of 2017, was basically a reckless investment firm that misrepresented itself as a kind of “neo-bank” from the start. It was funded almost entirely by customer deposits, which it gambled and lost racking up an over billion dollar deficit by the time it filed for bankruptcy in July, 2022. That is, aside from the $32 million earned from a public sale of CEL, the platform’s “native token.”

See also: What Crypto Lender Celsius Isn’t Telling Depositors (2020)

Tellingly, according to the CFTC, Mashinsky lied about the ICO too, falsely telling multiple media sources that Celsius actually raised $50 million.

Mashinsky, who claims to have created the Voice over Internet Protocol (VoIP), a precursor to ride-sharing app Uber, was known in the crypto community for his combative attitude. He would redress accusations of fraud and…