The founder of Celsius Network, a cryptocurrency company that caused the Caisse de depot et placement du Québec (CDPQ) to lose $200 million in less than a year, was arrested Thursday morning in New York.
Alex Mashinsky is notably accused of deception, market manipulation, fraud, said in a press release the office of the federal prosecutor of Manhattan Damian Williams.
The Securities and Exchange Commission (SEC) alleges that Celsius and Mr. Mashinsky defrauded investors by misrepresenting, among other things, his income, how he funds his user loans and the risks associated with his practices.
The defendant promoted Celsius, which he founded in 2018, as an alternative to banks by promising returns as high as 17% on cryptocurrency deposits.
In June 2022, the company announced that it was freezing withdrawals and transfers for its 1.7 million customers. This represented an asset freeze equivalent to nearly US$13 billion.
Alex Mashinsky, a 50-year-old born in Ukraine, before settling in Israel and then in the United States, faces several decades in prison, five of the seven charges against him each providing for a maximum sentence of twenty years.
By betting on the company in 2021, the CDPQ lost C$200 million in less than a year, raising questions about the due diligence that was carried out.
In February, the president and chief executive officer of the Caisse, Charles Emond, had assured that the woolen stocking of Quebecers would no longer venture into cryptocurrencies. “We won’t do any more,” he replied at a press conference. The CDPQ replied Thursday that it would not comment on the case.
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In addition, the former boss is accused of having manipulated the price of the cryptocurrency created by Celsius, the CEL, in particular by using, without their knowledge, funds deposited by customers to buy the currency and artificially inflate its price.
According to the United States Competition Authority (FTC), Celsius executives took more than $4 billion from client assets to finance, among other things, the operation of the company, make high-risk investments and loans. without guarantees.
With Agence France-Presse