A year after causing the Caisse de depot et placement du Québec (CDPQ) to lose 200 million, the ex-boss of the Celsius Network cryptobank Alex Mashinsky is finally facing criminal charges. The evidence accumulated by three federal agencies shows the extent to which this entrepreneur was able to manipulate the woolen stockings of Quebecers.
According to various US media, Mr. Mashinsky and former CFO Roni Cohen-Pavon were arrested in New York. Federal prosecutors, the Securities and Exchange Commission (SEC) and the Federal Trade Commission struck the same day.
Specifically, the founder and former chairman of the cryptobank faces seven counts, including fraud and manipulation. Combined, the maximum sentences for all counts add up to approximately 110 years in prison. The allegations have yet to be proven in court.
The CDPQ has already been singled out for its due diligence before injecting hundreds of millions into Celsius in October 2021. Evidence from US authorities adds another layer. Shortly after the arrival of the Quebec institution among the investors of the platform, employees described it as “a sinking ship”, underlines the SEC. According to another employee, there was “no hope” and Celsius’ business model was “fundamentally broken”.
“On May 21, 2022, a Celsius executive admitted in an internal message: “we have no profitable service”, adds the American stock market watchdog, in a document of about fifty pages.
Celsius Network has been splashed several times over the past year. US government agencies have previously likened his model to a Ponzi scheme – using an investor’s money to pay fake returns to other investors or those who want their money back.
It pooled deposits of cryptocurrencies, such as bitcoin. Depositors were offered interest that could sometimes reach 17%. The plunge in virtual currencies in 2022 sent the cryptobank into a liquidity crisis. It froze the withdrawals of its depositors before taking shelter from its creditors on July 14, 2022.
The platform has been insolvent for a year (July 14, 2022) after freezing withdrawals from its depositors. The latter are still trying to recover their cryptoassets.
“Mr. Mashinsky has repeatedly misrepresented the returns offered by Celsius, its profitability and the risks associated with the risks of entrusting its crypto-assets to the company”, underline the American prosecutors, in their complaint filed with the New Courts. yorkers.
The CDPQ has already made its mea culpa in this case by ensuring that it was no longer going to invest in the virtual currency sector. The pension plan manager would not comment Thursday on the arrest of his former business partner.
Mr. Mashinsky also faces a civil lawsuit filed earlier this year by New York State Attorney General Letitia James. It accuses the entrepreneur of having multiplied false declarations in recent years in addition to having deceived its customers while Celsius lost hundreds of millions of dollars in 2022. Mr. Mashinsky has refuted these allegations.
Last fall, a survey by La Presse revealed that the career path of the Celsius Network founder’s entrepreneur was much less successful than we thought. Several inaccuracies were noted. Mr. Mashinsky did not respond to questions from La Presse.
October 12, 2021: CDPQ announces its foray into the cryptocurrency sector with an investment in Celsius Network.
July 14, 2022: The cryptocurrency plunge prompts the platform to freeze withdrawals from its depositors before sheltering itself from its creditors.
September 27, 2022: Alex Mashinsky steps down as CEO.
July 13, 2023: The entrepreneur is arrested and faces criminal charges of fraud and manipulation.
