The United States Federal Trade Commission (FTC) has issued bankrupt cryptocurrency lender Celsius Network a hefty fine amounting to $4.7 billion over misleading customers, misappropriating customer assets, unsecured loans and other matters.

A July 13 statement indicates that Celsius and its affiliate companies will be permanently banned from “offering, marketing, or promoting any product or service that could be used to deposit, exchange, invest, or withdraw any assets.”

The FTC alleges that Celsius co-founders Alex Mashinsky, Shlomi Leon and Hanoch Goldstein have marketed the platform as a “safe place” for users to deposit their cryptocurrency holdings, while the company misappropriated over $4 billion in customer assets.

In addition to that, the financial watchdog accused Celsius of makig $1.2 billion in unsecured loans alongside falsely stating that it incorporated a $750-million user insurance policy. Below is an exert from the FTC statement:

“While lying to their customers to keep them from withdrawing their cryptocurrency deposits, Leon, Goldstein, and Mashinsky protected themselves by withdrawing significant sums of cryptocurrency from Celsius two months before the company filed for bankruptcy. Consumers subsequently lost access to their life savings, college funds, and money saved for retirement.”

The bankrupt crypto exchange has agreed to pay the $4.7 billion settlement with the FTC and former CEO Alex Mashinsky has been arrested on July 13th by local authorities.

Sources:

https://cointelegraph.com/news/celsius-network-fined-billions-by-ftc

https://www.cnbc.com/2023/07/13/former-celsius-ceo-arrested-company-agrees-to-pay-4point7-billion-settlement.html

https://www.coindesk.com/policy/2023/07/13/sec-sues-bankrupt-celsius-network-alex-mashinsky-over-securities-fraud/