Alex Mashinsky, the former CEO of collapsed crypto lender Celsius, faces seven fraud charges. But while his arrest is cathartic for creditors, the industry is still prone to dangerous hero worship.
in the Celsius balance sheet that, combined with a slump in the crypto market, left Celsius unable to meet a surge in customer withdrawals. On June 12, the company announced it would halt withdrawals, citing “extreme market conditions.” A month later, the company filed for Chapter 11 bankruptcy, trapping $4.7 billion of its customers’ money.
The public nature of the ledger on which crypto sits, says Kyla Curley, a forensic accountant and partner at advisory firm StoneTurn, means Celsius was bound to be caught out eventually. “If the data is telling a story, government agencies will take note and pursue,” she says. In crypto circles, Mashinsky’s arrest was considered “long overdue,” added Cory Klippsten, CEO at trading platform Swan Bitcoin.
The “litany of charges,” says Lisa Bragança, attorney at Bragança Law and ex-branch chief at the SEC, will be “devastating” for Mashinsky. “It’s a heck of a lot for the government to prove,” she says, “but it only has to prove pieces” to secure a significant jail sentence. It’s also likely that prosecutors have obtained testimony from Celsius insiders, explains Bragança—“and that’s big.
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