The Commodity Futures Trading Commission (CFTC) investigators concluded that Celsius Network and its former CEO Alex Mashinsky violated US rules. The CFTC may bring a case against Celsius this month.
The Securities and Exchange Commission (SEC) and federal prosecutors in Manhattan are also investigating Celsius. They are examining whether Celsius misled investors and engaged in market manipulation.
Celsius filed for bankruptcy in June due to its inability to meet financial obligations to customers. The company offered high yields on crypto deposits but had to suspend withdrawals and transfers in June because of liquidity problems.
The collapse of Celsius network raises concerns about the safety of crypto lending platforms. These platforms allow users to deposit crypto assets and earn interest but are not regulated like traditional banks.
The CFTC’s investigation into Celsius shows regulators are scrutinizing the crypto lending industry. If the CFTC pursues a case against Celsius, it could establish regulatory precedents for other crypto lending platforms in the future.
Here are some of the specific rules that Celsius and Mashinsky are alleged to have broken:
- Failing to register with the CFTC as a futures commission merchant.
- Misrepresenting the risks of investing in Celsius.
- Failing to disclose Celsius’s deteriorating financial condition.
- Engaging in market manipulation.
