According to a report from Bloomberg, the Commodity Futures Trading Commission (CFTC) is mulling over filing charges against Celsius Network and its former chief executive.
The regulatory body has determined that the crypto lender and Alex Mashinsky, the ex-CEO, of the company violated US rules before it collapsed last year.
The crypto lending platform enabled users to make crypto deposits and earn returns. Last year in June, the New Jersey-based firm paused withdrawals due to difficult market conditions.
A month later, it ended up filing for bankruptcy.
One of the unnamed sources of the report said that the attorneys of the enforcement unit of the CFTC have determined that Celsius should have registered with it.
Instead, under the leadership of its former CEO, the company ended up misleading investors. Therefore, the CFTC will now be reviewing the matter in order to decide if a court case should be filed.
According to the report, the CFTC could come to a decision about it within this month. There was no comment from the CFTC or the legal counsel of the former CEO and the company’s lawyers.
This year in January, Letitia James, the New York Attorney General, filed a lawsuit against Alex Mashinsky, which means his legal troubles are certainly not new.
According to the said lawsuit, the former Celsius CEO had made misleading and false statements regarding the safety of the company.
He had allegedly misrepresented and concealed the financial condition of the company and had not registered as a salesperson, or a commodities and securities dealer.
The New York Attorney General, Letitia James, said that even though Mashinsky had promised to lead investors toward financial freedom, he led them to financial ruin instead.
She added that the law has made it clear that it is illegal to mislead investors and make unsubstantiated and false promises.
In fact, she also demanded that the former CEO not be allowed to engage in any enterprise related to the offer, issuance, and sale of commodities or securities in the State of New York.
She also requested that he not be permitted to serve as an officer or director of a company that was operating in the state.
The bankruptcy proceedings of the crypto lender revealed that it had a balance sheet deficit of around $1.2 billion.
Last year in September, Mashinsky stepped down from his position and apologized for the financial problems that the community members were facing.
A media report in October alleged that a few weeks before Celsius paused customer withdrawals, the 57-year old had made a withdrawal of $10 million from a company-linked account.
The company has been trying to come up with a debt restructuring plan since the previous summer. In February, Novawulf, the digital investment firm, had become the winning bidder for Celsius’ troubled assets.
However, it had lost to a crypto consortium named Fahrenheit, which is supported by US Bitcoin Corp, the mining company, Proof Group, Arrington Capital, and more.