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Founder of crypto lender Celsius Network arrested, charged with fraud
- winstonreggie5 3y ago[dead]
- Exner32 3y ago[flagged]
- LatteLazy 3y ago[flagged]
- onlyrealcuzzo 3y agoThe SEC never said Celsius wasn't dealing in securities.
- yieldcrv 3y agoThe criminal charges are from the DOJ and specifically include commodities fraud. Nobody is going to be splitting hairs over SEC semantics because its not just about securities.
- Chabsff 3y agoThe very next paragraph goes into specific details wrt/ how Celsius allegedly lied to their clients. "The agency said Celsius engaged in "risky trading practices" and made uncollateralized loans, despite telling investors that it did not. The company also falsely claimed to have raised $50 million from selling its token, and claimed to have 1 million active users when in fact it had only around 500,000 depositors, many of whom were no longer active, the SEC said." Securities or not, selling something while knowingly lying to buyers about what it is they are purchasing is fraud.
- brvsft 3y agoMashinsky is a conman. This has nothing to do with the SEC being coy about whether BTC is a security and everything to do with Mashinsky lying to his customers about the risk involved in investing through Celsius. Here's a clip of him getting called out on his lies in a debate with a Bitcoin hater: https://www.youtube.com/watch?v=OBohJXhpRHU&t=2m7s https://www.youtube.com/watch?v=OBohJXhpRHU&t=2m7s
- martin8412 3y agoThat's completely irrelevant. It's not the job of the SEC to guide companies/people on what constitutes securities. Their job is to bring enforcement action if they believe the law is being broken. If you want legal advice, get a lawyer. If you don't want an expensive court case to determine who is in the right, don't do business in areas without established case law.
- cft 3y agoUSA was doing very well before FTC was created in 1914. In fact, most of American wealth that the US has been riding on, was accumulated before then. Airplane, Ford Model T, etc where all created before then.
- matthews2 3y agoAirplane was released in 1980.
- scottiebarnes 3y ago> It's not the job of the SEC to guide companies/people on what constitutes securities Which government agency fulfills that role?
- growse 3y agoThe judiciary. See the Howey test.
- scottiebarnes 3y agoI guess the judiciary system will eventually rule on what is legal / not legal via a legal contest, but courts are not actively informing and guiding American companies on what the rules are. Seems like there should be an agency that does? Furthermore, the SEC does seem to fulfill some of this role, ie. registering securities.
- 3y ago
- toomuchtodo 3y ago"Somebody is lying. Either the bank is lying or Celsius is lying.” - Alex Mashinsky EDIT: omg at the almost $5B settlement https://www.cnbc.com/2023/07/13/former-celsius-ceo-arrested-company-agrees-to-pay-4point7-billion-settlement.html https://www.cnbc.com/2023/07/13/former-celsius-ceo-arrested-... ("The FTC also announced a $4.7 billion settlement against the exchange, which will not be paid until creditors and investors have been repaid in bankruptcy proceedings.")
- jbverschoor 3y agoWhy not both?
- namirez 3y agoBecause it’s an “or” rather than an “xor”.
- mr90210 3y agoYou didn’t have to LOL
- angry_albatross 3y agoBut "xor" is the operation that prevents both. So maybe you meant that it is an implied "xor" instead of an "or"?
- TheAlchemist 3y agoAll those guys are going to end up in prison. It’s fraud after fraud - biggest one being Tether. It’s just impressive how long it all takes.
- realusername 3y agoI'm also surprised Tether hasn't imploded yet, it's opacity must have saved it in the short term
- jqpabc123 3y agoCrypto is a fraudster's paradise.
- chx 3y agoDeleted. Read https://ic.unicamp.br/~stolfi/bitcoin/2020-12-31-bitcoin-ponzi.html https://ic.unicamp.br/~stolfi/bitcoin/2020-12-31-bitcoin-pon... https://www.ic.unicamp.br/~stolfi/bitcoin/2021-01-16-yes-ponzi.html https://www.ic.unicamp.br/~stolfi/bitcoin/2021-01-16-yes-pon... instead.
- icepat 3y ago> If you rolled back every bitcoin transaction ever made you would end up with people in debt because the transaction fees were paid. This can be said about every bank transaction that charges a fee as well. Not a crypto fan at all (I find it rather silly overall), however this is not a particularly strong angle to attack it from.
- otikik 3y agoI am in firm opposition to crypto and I agree with you. That line of argumentation is so shaky that it makes crypto look better.
- hammock 3y ago[flagged]
- srejk 3y agoAre you really quoting fucking human trafficker Andrew Tate on economics? Electronic funds transfer (including credit cards) increase the velocity of money significantly. This means more transactions, which means more overall wealth creation. To say nothing of the fact that of that 1.5% fee, I'm recovering most, all, or more than it with things like cashback, rewards points, etc.
- deleted 3y ago[deleted]
- unmole 3y agoBeautiful
- jcranmer 3y agoJournalists really need to link to court documents. Although in this situation, there does seem to be quite a few of them: US v Mashinsky: https://storage.courtlistener.com/recap/gov.uscourts.nysd.601957/gov.uscourts.nysd.601957.1.0_4.pdf https://storage.courtlistener.com/recap/gov.uscourts.nysd.60... SEC v Celsius: https://storage.courtlistener.com/recap/gov.uscourts.nysd.602046/gov.uscourts.nysd.602046.1.0_7.pdf https://storage.courtlistener.com/recap/gov.uscourts.nysd.60... FTC v Celsius: https://storage.courtlistener.com/recap/gov.uscourts.nysd.602050/gov.uscourts.nysd.602050.1.0.pdf https://storage.courtlistener.com/recap/gov.uscourts.nysd.60... CFTC v Celsius: https://storage.courtlistener.com/recap/gov.uscourts.nysd.602049/gov.uscourts.nysd.602049.1.0_5.pdf https://storage.courtlistener.com/recap/gov.uscourts.nysd.60...
- stefek99 3y agoThis is exactly stuff I'm interested in, factual source information, as opposed to media bullshit.
- dcist 3y agoThank you! I never understand why journalists don't link to court documents.
- Workaccount2 3y agoThey probably do but the editors remove them. It seems that rule number one of running a news site is to never have any external links. It's like a casino, they want you to come in and get lost.
- mschuster91 3y agoThat seems to be the case for US media... here in Germany, it's a bit different at least for quality media. Spiegel, Heise, Die ZEIT and T-Online all happily link to sources, even up to competing news media.
- esperent 3y ago
- csours 3y agoSome people are confused about SEC involvement. As a reminder, the SEC cannot bring criminal charges. If someone gets arrested, Department of Justice decided to arrest them. > The U.S. Attorney's Office in Manhattan said it would hold a press conference at 11:30 a.m. ET (1530 GMT) to provide details on the charges against Mashinsky and Cohen-Pavon.
- legitster 3y agoSure, but the SEC completely controls the definition of criminality here. There was no arrest-able offence until the SEC made it one.
- JohnFen 3y agoI think that it's more accurate to say that the legality of these actions wasn't clear, which everybody knew from the start. These companies decided to take a risk, and they rolled badly on the dice. The legality is still unclear, too. We don't know whether or not these companies violated the law until a court rules on it.
- tyre 3y ago> the legality of these actions wasn't clear They were completely clear. The whole time. There were no moments when it was a reasonable thought that securities weren't securities "because blockchain.
- csours 3y agoI really don't know how to respond to this. You can see the charges starting on page 37 of this document: https://storage.courtlistener.com/recap/gov.uscourts.nysd.601957/gov.uscourts.nysd.601957.1.0_4.pdf https://storage.courtlistener.com/recap/gov.uscourts.nysd.60... The document references the Code of Laws of the United States of America or USC, specifically the sections on Securities Fraud, Commodities Fraud, and Wire Fraud. The SEC didn't add these sections just for this case, they were there before Celsius was founded.
- justapassenger 3y agoOh no. Anyway.
- elforce002 3y agoAnd now "crypto" bros are moving to AI. The never ending story.
- angry_albatross 3y agoAI is not in the same category in my book. Both may be overhyped in some ways, but blockchain technology was fundamentally a bad idea with no legitimate use cases.
- bottlepalm 3y agoBitcoin has proven to be an inflation resistant store of value enabling private and fast transactions to anywhere in the world - seems pretty successful to me despite being constantly derided by hacker news for over 10 years now.
- angry_albatross 3y agoThe value will deflate at some point, it's kind of a mathematical certainty. We cannot extract more money from the system than we put in, since Bitcoin is a non-productive asset. It does not generate revenue the way that a business/company does. And someone has to pay for the electricity of the miners, so money is draining out of the system, making it a negative sum game that people are playing. I would also disagree that the transactions are fast or private.
- bottlepalm 3y agoPrivate as in independent of going through any bank or institution like you would have to do to move money internationally in any other form. A store of value like gold, the dollar, or Bitcoin has nothing to do with generating revenue - only the intrinsic value of how hard is it to create more - dollars can be printed, a gold vein can be discovered tomorrow that would crash the price, Bitcoin on the other hand there's no chance of creating more than what's planned - which makes it a great store of value in turn valuable.
- zzzeek 3y agoI dunno it feels like there might be a pattern here
- bottlepalm 3y agoThis is great for crypto. Justice for scammers who thought crypto users could be taken advantage of without consequence. Ponzi schemes like Celsius are not exclusive to crypto and it's great to know the Justice department will prosecute scammers regardless of the unit of currency being used.
- bearjaws 3y agoI can't tell if this is a meme "This is good for Bit Coin" or serious. Of course the DOJ will go after anyone committing fraud?
- wmf 3y agoNope, the DOJ only prosecutes crypto fraud after bankruptcy lawyers do all the research for them. And don't get me started on Tether.
- Forgeties79 3y agoI get what you’re trying to say, but honestly? All this does is hurt the reputation of crypto further. It’s yet another headline about crypto scams/ponzi scheme/etc. projected to an audience that is weary of being easily scammed out of money they believe to be safer elsewhere. No one who is skeptical or on the fence about crypto is going to see this headline and go “oh good! They must be catching the bad guys, so now I feel more secure about getting into crypto.” Just like no one who sees an explosion in arrests of violent criminals in their home town thinks “good, must be a lot safer here now.”
- codetrotter 3y ago> All this does is hurt the reputation of crypto further. There is exactly one legitimate “crypto”, and it is named Bitcoin. All else ranges from speculative promises about future possibilities (smart contracts etc) to straight up scams. Don’t let the people abusing the name of “crypto” detract from the greatness that was the invention of Bitcoin.
- 3y ago
- shortrounddev2 3y agoThe best thing to come out of the pandemic is the downfall of Crypto after the federal reserve raised interest rates
- thrownaway89865 3y agoWould someone explain to me what the endgame of these fraudsters is? I mean, of course they are trying to get rich quick pulling these schemes but you would believe that they do it because they perceive that there is some sort of opportunity to cash out without inevitably going to prison some day, right? What is the thought process in the mind of these criminals when shit hits the fan? Maybe just hire very expensive lawyers or move to some weird jurisdiction where they can't get arrested?
- deepsquirrelnet 3y agoNotoriously weak prosecution of white collar crime makes more people willing to take risks. I’m not sure it’s any more complicated than that. If you’re going to commit small scale fraud, you might as well commit large scale fraud, because on face, it seems less risky.
- JumpCrisscross 3y ago> Notoriously weak prosecution of white collar crime makes more people willing to take risks This is more a perceptions problem in Silicon Valley. Every fraud announcement is followed by hand wringing around the lack of prosecution. Every prosecution, convictions. Every conviction, sentencing.
- deleted 3y ago[deleted]
- kayodelycaon 3y agoYou’re thinking about this too hard. The vast majority of them have either 1. Not considered what could happen after they have the money. 2. Think they are smart enough to will get away with it.
- deleted 3y ago[deleted]
- gloryjulio 3y agoThere are tons of small scale influencer scammers are not prosecuted, and some could even pull the scams again. Logan Paul, techlead..u get the idea
- progbits 3y agoIs there an equivalent to https://chainsec.io/defi-hacks/ https://chainsec.io/defi-hacks/ which tracks crypto bros got arrested/sentenced?
- legitster 3y agoLet's say I run a swap meet for people to buy and sell Pokémon cards. There are lots of scammers out there, but I promise people they are going to get good prices. And I even offer to buy cards off of people at good prices to drum up interest. Tomorrow, the SEC decides that Pokémon cards are securities (far-fetched, but work with me here) Suddenly, anyone buying and selling them becomes a criminal. I tell people via text message "pish-posh - there's no way the SEC could enforce this". But people stop coming so I promise them that I can buy up all of their cards anyway. Especially the cards that complete my collection. Then it gets enforced. Not only did I trade in illegal assets, I am now guilty of fraud for telling people it was safe. I am also guilty of market manipulation! And on top of it, I did it via text message so it's now wire fraud to boot. As far as I understand reading the charges, this is mostly what he is guilty of. This is a bit different than the "true" type-1 frauds that exist in crypto - the blatant pump and dump schemes, et al. In fact, I would feel safe to say there might have been no fraud without the SEC classification. (EDIT: Ignore this since they also did a lot of legitimate fraud too) Regardless, the writing is on the wall for crypto. I could not even fathom why you would want to be holding onto even Bitcoin or Ether right now.
- nickphx 3y agoUhhh, two brief examples of fraud: Celsius said they had insurance to cover deposits - they did not. Celsius said customer funds are not used for high-risk loans -- they were.
- kevinthew 3y agoRight -- this is pretty clear cut fraud. I think the normalization of criminal activity in the crypto space is largely due to regulatory ignorance but when there are clear cut cases of fraud, the SEC should aggressively prosecute these crooks.
- dmitrygr 3y agoYour example left out the crimes… You didn’t promise people that their Pokémon cards ARE money. You didnt promise them that they WILL NECESSARILY go up in value. That’s the difference.
- pluc 3y agoSay it with me: crypto is fraud
- basementdev 3y ago[dead]
- gdsdfe 3y agoit's kinda ironic that crypto started as a rebellion against the banks that are stealing our money and all that
- FactualOrion 3y agoPeople should look into his wife's actions as well, selling merch making fun of victims of her husband etc. Great news to hear though.
- neom 3y agoJust put her in a room alone with Tiffany Fong for a half hour, all will be right in the world. https://www.youtube.com/watch?v=6FONC7njr64 https://www.youtube.com/watch?v=6FONC7njr64
- misiti3780 3y agoHe has quite the personal website: https://www.mashinsky.com/ https://www.mashinsky.com/
- dsalzman 3y agoHopefully he updates https://www.mashinsky.com/failed-ventures https://www.mashinsky.com/failed-ventures
- popcalc 3y ago>Groundlink vision was that happy drivers = happy customers while Uber was subsidizing rides for Millennials = IPO of a money loosing business. When people miss basic typos it can sometimes expose a culture of grift going all the way down. The reason many dictators have horrendous interior design in their palaces. Their cousin gets the contract and then it gets outsourced in a chain a dozen times before someone buys the actual thing off AliExpress and pockets $5.
- FreshStart 3y agoOkay, now that I have your attention, how about a new sort of crypto investment. Let me pitch you.. A privatized prison just for crypto scammers and bros. They could be the almost free hb1-labour, but with alot more entrepreneural spirit. Get coders, managers and advertisers at very reasonable prices. Payable even bitcoin or montero.
- naikrovek 3y agoI'm shocked! SHOCKED! Well, not that shocked. cryptocurrency is very attractive to people who want to scam people out of money, and ransomware probably wouldn't exist without it. I say pour on the hate for cryptocurrency. The hate is justified and fully earned.
- sakopov 3y agoWell that's definitely one way to "unbank" yourself.
- stuckkeys 3y agoWaa looking to see if he was featured in the Forbes magazine front cover. He was somewhat praised in their articles. I guess it is true, Forbes is the honeypot for Tech scumbags haha
- harouiin 3y ago[flagged]
- TheRealPomax 3y ago[flagged]
- bertil 3y agoI haven’t followed crypto very closely, but I noticed a few names. I’ve read the headlines for the last few weeks. It seems like most prominent players are now in legal trouble, enough to force them to cease operations. Who are the most prominent players who are operating?
- latchkey 3y agoBrian Armstrong CZ
- worstestes 3y ago> CZ hopefully not for much longer
- dcist 3y agoVitalik Buterin
- usefulCommenter 3y ago[flagged]
- mousetree 3y agoObligatory Matt Levine article on the topic: https://www.bloomberg.com/opinion/articles/2023-07-13/celsius-was-lying?sref=Ux43rPpR https://www.bloomberg.com/opinion/articles/2023-07-13/celsiu...
- rossdavidh 3y agoIt probably makes me a shallow person, but the only financial news that I find worth reading (i.e. afterwards I understand things a little better) is Matt Levine's column.
- ValentineC 3y agoObligatory paywall bypass link: https://archive.li/vELkq https://archive.li/vELkq
- sharts 3y agoMeh, the SEC is merely concerned with looking like a reputable and trustworthy authority. After some fines are paid, all will be well. This is theater.