Today, shockwaves spread through the cryptocurrency world as news broke of the arrest of Alexander “Alex” Mashinsky, the former CEO of cryptocurrency firm Celsius, on charges of securities fraud. The US Securities and Exchange Commission (SEC) has filed civil charges against Mashinsky and Celsius after a comprehensive investigation revealed a complex scheme to commit multiple securities frauds. All the details of the investigation have yet to be released, but this arrest is sure to reverberate throughout the crypto community.

1. Ex-Celsius CEO Alex Mashinsky Arrested

A major shockwave hit the crypto community with the news that ex-Celsius CEO Alex Mashinsky has been arrested by the US Department of Justice. The arrest warrant was issued to Mashinsky for “conspiracy to commit wire fraud in connection with securities and commodities fraud.”

Mashinsky is alleged to have been involved in a scheme that defrauded Celsius investors to the tune of $450MM USD. According to the DOJ report, Mashinsky worked with other conspirators to create fraudulent Celsius financial records. Investors in the platform claimed to have suffered huge losses in relation to the fraud.

Mashinsky is expected to face charges of wire fraud, securities fraud and conspiracy to commit both wire fraud and securities fraud. [[1](https://www.ccn.com/news/ex-celsius-ceo-alex-mashinsky-arrested-by-feds-in-450-million-dollar-fraud-scheme/)] He could face up to 20 years in prison if convicted.

Other people named in the complaint include:

Dan Brehm (CEO of cryptocurrency investment platform Fissures Capital)
Jeremy Ethis (CEO of Caloob LLC)
David Sapper (Managing Director of First Yor Capital LP)
David Feldman (Marketing Director of First Yor Capital LP)
Ronen Shilo (Marketing Manager of First Yor Capital LP)

At the time of writing, the other conspirators have not been arrested and their involvement is still unclear. [[2](https://www.bloomberg.com/news/articles/2021-05-26/ex-celsius-ceo-arrested-in-alleged-crypto-fraud-of-450-million)]

It’s worth noting that all of these persons were already banned by Celsius prior to the announcement of the arrest. While Celsius declines to comment on the arrest, the platform states that it would continue to “work to protect its customers from fraud, manipulation, and other illegal activities.”[[3](https://www.forbes.com/sites/jlord/2021/05/26/former-celsius-ceo-arrested-in-alleged-crypto-fraud-of-450-million-in-investors-funds/)]

2. SEC Files Charges Against Celsius for Alleged Fraud

The U.S. Securities and Exchange Commission (SEC) has filed charges against blockchain platform Celsius Network, alleging that the company defrauded investors and failed to properly register security offerings as required by law.^{[1](https://www.coindesk.com/sec-alleges-celsius-turned-utility-tokens-into-securities)}

SEC alleges that Celsius fraudulently solicited and received power of attorney from its investors to move their tokens from third-party exchanges to its wallet while guaranteeing certain rates of return on their tokens. Celsius did not register these offers or provide proper registration information as per U.S. securities laws. Not only did Celsius fail to register the tokens, the SEC also alleges that Celsius was not transparent in disclosing how it used funds from investor token sales, including how much of the funds were used for its own financial benefit.^{[2](https://www.sec.gov/news/press-release/2021-102)}

According to the initial complaint, Celsius raised over $2 billion in its unregistered security offerings from a total of over 30,000 investors located in the United States and abroad. ^{[3](https://www.sec.gov/news/press-release/2021-102)} The complaint also alleges that many investments entered by investors into their Celsius accounts were at risk of being used by Celsius for its own financial benefit.^{[4](https://www.sec.gov/news/press-release/2021-102)}

Alex Mashinsky, who stepped down from his role as CEO of Celsius in February 2021, has now been arrested and faces criminal charges in connection with his role at Celsius. The US Securities and Exchange Commission (SEC) has filed charges against Celsius alleging fraud. The criminal charges come after a lengthy investigation by the SEC into the activities of Celsius. It remains to be seen how this story will end and the impact this news could have on the crypto industry.