By
Godfrey Benjamin
May 27th, 2024
According to the FTC, the co-founders misappropriated no less than $4 billion worth of customer assets.
Celsius Network has just been hit with a $4.7 billion fine, according to the United States Federal Trade Commission (FTC). The FTC, however, explained that the judgment may have to be suspended for now. That is to allow the bankrupt crypto lender to fulfil its obligations and return all it owes to customers.
In the July 13 announcement, the FTC also revealed that it is placing a permanent ban on Celsius and its affiliate companies. So, henceforth, they may no longer offer, market, or even promote anything that may serve as an investment.
‘Celsius Duped Customers’, FTC Remarks
The FTC levelled some allegations against the New Jersey-based firm in its recent announcement. According to the regulator, Celsius marketed a variety of crypto products and services to its customers, promising them all sorts. The FTC, however, believes that Celsius co-founders Alex Mashinsky, Shlomi Leon and Hanoch Goldstein only tricked customers into depositing their crypto assets on the platform.
According to the FTC, the co-founders misappropriated no less than $4 billion worth of customer assets. However, the co-founders have still not agreed to the fine, so the case is likely to proceed to the federal court.
Meanwhile, the FTC has also accused Celsius of consistently lying to its customers about its well-being. Celsius allegedly made $1.2 billion in unsecured loans while falsely declaring that it had a $750-million user insurance policy. Per FTC, while Celsius kept taking customer funds, its executives continued enriching their own pockets. Part of the statement reads:
“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.”
At the moment, Celsius currently faces lawsuits from both the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Meanwhile, Mashinsky has also been sued by the US Department of Justice on a seven-count charge and is currently detained. Coinspeaker reported last July that Celsius filed for Chapter 11 bankruptcy.