Investigators at the Commodity Futures Trading Commission (CFTC) concluded their probe into the bankrupt crypto lender Celsius, finding that the firm and its former CEO Alex Mashinsky broke U.S. laws before the firm filed for bankruptcy, Bloomberg reported on Wednesday.
CFTC attorneys found that Celsius had misled investors, should have registered with the regulator and Mashinsky himself had also broken regulations, said people with knowledge of the matter. If the majority of commissioners agree with the investigators, the CFTC could file a case against the crypto lender in federal court this month.
The investigators’ conclusion is consistent with the one presented by an independent examiner in February, who found that Celsius’ problems dated back to at least 2020. In the 476-page document, the examiner found that many Celsius insiders were aware that certain activities were illegal, and some employees withdrew large amounts of tokens before the firm’s collapse.
The U.S. Securities and Exchange Commission (SEC) and federal prosecutors are also looking into the firm, according to bankruptcy filings from May 2022.
Last month, a group of Celsius creditors accused market maker Wintermute of aiding Celsius with wash trading. The lawsuit alleges that Wintermute helped Mashinsky artificially inflate the value of the CEL token in May 2022 during the collapse of the Terra ecosystem.
Looks like Celsius getting some personal liability, and that one of their 'market makers' is now being investigated for "aiding in the fraud" based on the claims of investors. pic.twitter.com/3z3hSoiDqh
— Adam Cochran (adamscochran.eth) (@adamscochran) July 5, 2023
Celsius filed for Chapter 11 bankruptcy protection in July 2022 with only $167 million in liquidity at the time. In May, a consortium called Fahrenheit won a bid to acquire the firm’s assets for $2 billion and filed an updated bankruptcy resolution plan that was met with significant criticism from creditors.