The US Federal Trade Commission (FTC) has ordered Celsius Network, a popular cryptocurrency platform, to pay a staggering $4.7 billion in fines. The decision comes after the regulator concluded that Celsius and its CEO, Alex Mashinsky, violated US law. While Celsius has reached a settlement with the FTC, the platform’s founders have chosen to reject the deal and will now face a lawsuit in federal court.
Settlement Agreement and Financial Implications
Under the settlement agreement, Celsius Network has agreed to pay the hefty penalty, but there is a catch. The payment of the fine will be suspended to allow the platform to repay its creditors. However, if any additional funds are discovered in excess of the amount required to settle debts, they will be confiscated. The suspension of the judgment will be lifted if the court finds that any non-debtor defendant failed to disclose significant assets, or if the bankruptcy case concludes.
It’s essential to note the distinction between the FTC (Federal Trade Commission) and the CFTC (Commodity Futures Trading Commission). Although they are two separate regulators, they closely cooperate and share privileged information. In this case, it appears that the CFTC passed its findings to the FTC, which decided to take action against Celsius Network and its leadership.
Celsius Founder’s Arrest and FTC Complaint
Following the initial reports, Alex Mashinsky, the CEO of Celsius, has reportedly been arrested, and the FTC has officially filed a complaint against those involved. The complaint alleges that Mashinsky and his co-founders, Shlomi Daniel Leon and Hanoch Goldstein, swindled customers out of their funds. Samuel Levine, the director of the Consumer Protection division of the FTC, emphasized that emerging technologies are not above the law and that Celsius engaged in fraudulent practices.
As part of the FTC’s order, Celsius Network and all its business entities are now prohibited from handling customer deposits. This measure aims to protect consumers from potential future harm. By banning Celsius from managing people’s money, the FTC seeks to send a clear message that no business, regardless of its innovative model, can operate unlawfully.
While Celsius Network has accepted the settlement, Mashinsky, Leon, and Goldstein have chosen a different path. They have rejected the deal offered and will now face a federal court lawsuit. The U.S. District Court for the Southern District of New York will handle the case, where the three executives will have to face the consequences of their alleged actions.