FTC fines Alex Mashinsky $4.7 billion in the Celsius case

The U.S. Federal Trade Commission (FTC) has issued a ruling against former Celsius CEO, Alex Mashinsky, related to the collapse of this crypto lending platform.

According to a filing in the Southern District of New York, the FTC imposed a $4.7 billion judgment on Mashinsky. This amount mainly relates to user losses after Celsius collapsed in 2022.

MAIN CONTENT

• The FTC imposed a $4.7 billion judgment on Alex Mashinsky, but most of it is suspended.
• Mashinsky only needs to pay a $10 million fine if he does not violate the associated conditions.
• He is also permanently banned from activities related to cryptocurrencies and financial promotion.

FTC imposes a $4.7 billion judgment but most of this amount is suspended

The FTC’s ruling does not mean Mashinsky has to pay the full $4.7 billion immediately. The agency states he only needs to pay $10 million in fines. The remaining part of the judgment will be nullified if there is no evidence of asset concealment or false financial disclosures.

Mashinsky is permanently banned from promotional activities and crypto-related sectors

In addition to the fine, the FTC issues a permanent ban on Mashinsky from advertising, marketing, promoting, or distributing. The ruling also prevents him from participating in future deposit-taking, trading, or investment activities, effectively blocking him from crypto-related activities for life.

Celsius collapse and user funds frozen

Celsius Network filed for Chapter 11 bankruptcy in July 2022 following liquidity crises and the freezing of $4.7 billion of user funds. The FTC accuses Mashinsky and Celsius executives of causing the company’s collapse through deceptive and unfair marketing practices related to crypto services and lending.

FTC also mentions manipulation of CEL token prices

The agency states that Mashinsky and his team manipulated the market, especially the price of the native CEL token. Due to this fraudulent conduct, Mashinsky is currently serving a 12-year prison sentence based on a 2024 verdict.

Financial consequences after Celsius’s bankruptcy

After filing for bankruptcy, Celsius’s market capitalization dropped from $1.7 billion to $677,000, while CEL plummeted 99% from $8 to $0.017 at the time mentioned. These figures highlight the significant damage caused by the collapse, although current data does not yet show the full extent of final losses for individual investors.

Celsius rebranded as Ionic Digital and continues to fulfill creditor obligations

By 2024, Celsius transitioned to a new model under the name Ionic Digital, operating as a Bitcoin mining company. According to Bitcoin Treasuries, this company currently holds 2,662 BTC, valued at approximately $201 million. It remains privately owned and focuses on Bitcoin mining and energy value extraction.

Source: Bitcoin Treasuries The rebranding to Ionic Digital does not mean the company avoids responsibility to creditors. According to available information, the firm has distributed nearly $3 billion to creditors, with the third distribution providing over $220 million. The recovery rate has reached 64%, with a target of 85%, but current data does not specify when this level will be achieved or if there will be further distributions.

Summary

The FTC’s ruling adds an additional legal layer of accountability for Celsius’s former leadership, while the platform’s bankruptcy proceedings continue through creditor distributions. Several points remain unclear, especially how the suspended judgment will be activated in the future and the progress of recovering remaining funds for affected parties.

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