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In a major setback for Celsius Network, the United States Federal Trade Commission (FTC) has levied an enormous $4.7 billion penalty on the New Jersey-based cryptocurrency lender. Nevertheless, the FTC has suggested that the ruling may be temporarily halted, permitting the insolvent firm to meet its responsibilities and reimburse its clients.
The FTC’s announcement on July 13 also disclosed a lasting prohibition on Celsius and its associated entities, barring them from offering, marketing, or promoting any investment-related products or services.
The FTC has made several accusations against Celsius, asserting that the company, co-founded by Alex Mashinsky, Shlomi Leon, and Hanoch Goldstein, misled customers into depositing their cryptocurrency assets on the platform. According to the regulator, Celsius promoted a variety of crypto products and services with deceptive assurances to clients.
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The FTC further claims that the co-founders misappropriated customer assets exceeding $4 billion. However, the co-founders have not yet accepted the fine, suggesting that the case is likely to advance to federal court.
Additionally, the FTC charged Celsius with persistently misleading its customers regarding its financial stability. While Celsius continued to accept customer funds, it allegedly issued $1.2 billion in unsecured loans and falsely asserted the existence of a $750 million user insurance policy. The FTC’s statement indicates that the company’s executives profited by withdrawing substantial amounts of cryptocurrency from Celsius just two months prior to filing for bankruptcy, all while misleading customers and obstructing their ability to withdraw their deposits.
The challenges for Celsius extend further, as the company is currently contending with lawsuits from the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Moreover, Alex Mashinsky, one of the co-founders, is facing a seven-count indictment from the US Department of Justice and is presently in custody. Last July, Celsius had already initiated Chapter 11 bankruptcy proceedings.
The gravity of the allegations and the ongoing legal disputes cast uncertainty over the future of Celsius Network. The fines, bans, and pending lawsuits raise concerns regarding the credibility and reliability of the company, as well as the broader ramifications for the crypto lending sector.
The post Celsius Network Slapped with $4.7 Billion Fine by FTC, Faces Permanent Ban appeared first on BitcoinWorld.
