The United States Commodity and Futures Trading Commission (CFTC) has concluded its investigations into Celsius Network, finding the former CEO and the company guilty of violating several regulations. This news caused the price of the platform’s native cryptocurrency, CLE, to drop by 10%.
According to the CFTC report, this was due to Celsius deceiving investors and failing to register with the Commission. If the majority of the CFTC’s commissioners agree with the findings, they may file a lawsuit in federal court in the coming month.
This was preceded by New York Attorney General Letitia James filing a lawsuit against the former CEO, Alex Mashinsky, for making “false and misleading representations” in order to convince investors to deposit large sums of money.
Celsius Network had a meteoric rise in popularity when it was established in 2017, especially during the Covid-19 pandemic when it offered loans on attractive interest rates. During this time, Mashinsky promoted the company’s products as a safer alternative to traditional banking.
However, when the price of Terra’s algorithmic stablecoin UST dropped and the cryptocurrency market went into a bear market, the company suffered significant losses. As a result, Celsius froze withdrawals in June 2020, and subsequently filed for bankruptcy protection a month later.
The SEC and federal prosecutors in Manhattan are also conducting investigations on the company, which was granted permission to restart withdrawals in March 2021 and convert its altcoin holdings into Bitcoin (BTC) and Ethereum (ETH) in June.
