{"id":5300,"date":"2023-07-16T13:33:31","date_gmt":"2023-07-16T13:33:31","guid":{"rendered":"https:\/\/mysourcefunding.com\/startups\/celsius-founder-alex-mashinskys-arrest-wont-fix-crypto\/"},"modified":"2023-07-16T13:33:31","modified_gmt":"2023-07-16T13:33:31","slug":"celsius-founder-alex-mashinskys-arrest-wont-fix-crypto","status":"publish","type":"post","link":"https:\/\/mysourcefunding.com\/?p=5300","title":{"rendered":"Celsius Founder Alex Mashinsky\u2019s Arrest Won\u2019t Fix Crypto"},"content":{"rendered":"
\n

However, the collapse of the Terra Luna stablecoin in May 2022 blew a billion-dollar hole in the Celsius balance sheet that, combined with a slump in the crypto market, left Celsius unable to meet a surge in customer withdrawals. On June 12, the company announced it would halt withdrawals, citing \u201cextreme market conditions.\u201d A month later, the company filed for Chapter 11 bankruptcy, trapping $4.7 billion of its customers\u2019 money.<\/p>\n

A similar pattern played out at other crypto lenders: BlockFi, Voyager Digital, and Genesis Global Capital have all since filed for bankruptcy, caught up variously in the failures of the Terra Luna stablecoin, hedge fund Three Arrows Capital and crypto exchange FTX.<\/p>\n

\u201cIn the last 18 months, it has become very clear that centralized borrow-lend businesses are a huge problem. They ended up being the epicenter\u201d of the collapse, says Kling\u2014whose fund has substantial assets still locked in the FTX bankruptcy. \u201cThere was so much reckless lending.\u201d<\/p>\n

The public nature of the ledger on which crypto sits, says Kyla Curley, a forensic accountant and partner at advisory firm StoneTurn, means Celsius was bound to be caught out eventually. \u201cIf the data is telling a story, government agencies will take note and pursue,\u201d she says.<\/p>\n

In the year since Celsius declared bankruptcy, Mashinsky has been accused by creditors of lying about the nature of the service, and by an independent examiner commissioned by the bankruptcy court of operating a Ponzi scheme, whereby payouts to existing customers were funded in effect by others\u2019 deposits.<\/p>\n

In crypto circles, Mashinsky\u2019s arrest was considered \u201clong overdue,\u201d added Cory Klippsten, CEO at trading platform Swan Bitcoin.<\/p>\n

The DOJ complaint states that, while Mashinsky portrayed Celsius as a \u201cmodern day bank,\u201d he instead operated the the company as \u201ca risky investment fund, taking in customer money under false and misleading pretenses and turning customers into unwitting investors in a business far riskier and far less profitable than what Mashinsky had represented.\u201d<\/p>\n

The \u201clitany of charges,\u201d says Lisa Bragan\u00e7a, attorney at Bragan\u00e7a Law and ex-branch chief at the SEC, will be \u201cdevastating\u201d for Mashinsky. \u201cIt\u2019s a heck of a lot for the government to prove,\u201d she says, \u201cbut it only has to prove pieces\u201d to secure a significant jail sentence. It\u2019s also likely that prosecutors have obtained testimony from Celsius insiders, explains Bragan\u00e7a\u2014\u201cand that\u2019s big.\u201d<\/p>\n

At word of Mashinsky\u2019s arrest, a number of Celsius creditors gathered in group channels on Telegram and elsewhere to celebrate: \u201cFuck yeah,\u201d wrote one creditor. \u201cI\u2019d love to see a perp walk,\u201d said another. But some were more reserved, pointing out that the arrest will do nothing to accelerate asset recoveries. \u201cI wish there was a way to make this madness end sooner,\u201d one channel member wrote.<\/p>\n

Others have been left with an uncomfortable sense that crypto has not yet managed to clear its decks of bad actors and that, should another hype cycle arrive, the conditions that bred the likes of Celsius and FTX could recur. In short, that lessons have not necessarily been learned.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

However, the collapse of the Terra Luna stablecoin in May 2022 blew a billion-dollar hole in the Celsius balance sheet that, combined with a slump in the crypto market, left Celsius unable to meet a surge in customer withdrawals. On June 12, the company announced it would halt withdrawals, citing \u201cextreme market conditions.\u201d A month […]<\/p>\n","protected":false},"author":1,"featured_media":5301,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[77],"tags":[],"class_list":{"0":"post-5300","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-startups"},"yoast_head":"\nCelsius Founder Alex Mashinsky\u2019s Arrest Won\u2019t Fix Crypto | Brandiary<\/title>\n<meta name=\"description\" content=\"However, the collapse of the Terra Luna stablecoin in May 2022 blew a billion-dollar hole in the Celsius balance sheet that, combined with a slump in the\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mysourcefunding.com\/?p=5300\" \/>\n<meta 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