No one has heard much from Celsius CEO Alex Mashinsky since the company froze customer accounts on June 12 due to “extreme market conditions,” fueling speculation that he's trying to flee the country. Is Mashinsky on the run?
“All Celsius employees — including our CEO — are focused and hard at work in an effort to stabilize liquidity and operations. To that end, any reports that the Celsius CEO has attempted to leave the U.S. are false,” a Celsius spokesperson told Coin Telegraph on June 28.
The rumors that Mashinsky was trying to split town started from a June 27 tweet by Mike Alfred, crypto journalist and founder of the crypto analytics firm Digital Assets Data. Alfred’s tweet, which appears to have been deleted, states that Mashinsky was seen at the Morristown Airport in New Jersey attempting to board a plane when authorities stopped him.
“Unclear at this moment whether he was arrested or simply barred from leaving,” Alfred’s now-deleted tweet says, Investing.com reports.
Celsius is restructuring through a voluntary bankruptcy.
Bankruptcy proceedings for Celsius began July 19, about a month after the company froze customers out of access to almost $4.7 billion. The company announced on July 13 that it initiated a voluntary Chapter 11 proceeding to “stabilize its business and consummate a comprehensive restructuring transaction that maximizes value for all stakeholders.”
“This is the right decision for our community and company,” Mashinsky said in a company statement. “I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company.”
Celsius is facing lawsuits and investigations.
The company is currently facing some lawsuits and investigations. Former investment manager Jason Stone, the CEO of KeyFi, filed a lawsuit against the company on July 8, alleging the crypto lender is a “fraud” and a “Ponzi scheme,” CNBC reports. Celsius and KeyFi reportedly had a gentleman’s agreement (nothing in writing) where KeyFi would “manage billions of dollars in customer crypto-deposits in return for a share of the profits generated from those crypto-deposits,” the lawsuit states.
But Celsius’ failure to implement risk management strategies endangered customer funds, Stone alleges. He also accuses the company of artificially inflating the price of its own Celsius token, CEL.
Six states are investigating Celsius.
Securities regulators in at least six states have opened investigations into Celsius’ operations and decision to freeze withdrawals from customer accounts. On July 13, the same day Celsius filed for bankruptcy, Vermont joined Texas, Alabama, New Jersey, Kentucky, and Washington in launching an investigation into the company’s investment strategies.
A class action lawsuit has been filed against Celsius.
Celsius customers are also taking aim at the company with a class action lawsuit filed July 24 by the stockholder rights law firm Bragar Eagel & Squire, P.C. The lawsuit names Celsius, KeyFi, Mashinsky, and others.
The complaint alleges Celsius, Mashinsky, and others violated provisions of the Exchange Act by carrying out a plan, scheme, and course of conduct to deceive retail investors into purchasing Celsius “financial products” at artificially inflated prices and endorsed false statements they knew or should have known were misleading. The complaint also claims that Celsius and its affiliates violated the Securities Act by selling non-exempt securities without registering them.