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The California Department of Financial Protection and Innovation (DFPI) issued a Desist and Refrain order against bankrupted crypto lender Celsius Network and its chief executive officer, Alexander Mashinski, for violation of corporation code section 25110 and 25401.
California’s financial services regulator claim Celsius Earn Rewards accounts are securities as defined by the Corporate Securities Law of 1968 and that Celsius sold these securities without first being qualified, thereby making the Earn Rewards accounts offered by Celsius an unlicensed security.
Pursuant to Section 25532 of the Companies Act, Celsius Network Inc., Celsius Network Limited, Celsius US Holding LLC, Celsius Network LLC, and their respective subsidiaries, and Alexander Mashinski, are to suspend and refrain from future offers and sales. California securities, including but not limited to Earn Rewards accounts, unless such sale is certified under Corporation Code Sections 25111, 25112, or 25113; or the transaction is exempt or ineligible.”
Regulators also alleges that the New Jersey-based company and its CEO, made materially misleading statements about the risks of investing in these accounts.
Mashinsky represented on numerous occasions that even in a worst-case scenario, Earn Rewards Investors would be able to timely withdraw their investments and would not suffer losses on their investments, and continued to make representations that it was safe to deposit assets with Celsius even in the days leading up to the companys decision on June 12, 2022, to suspend customer withdrawals.
A commission representing Celsius’s unsecured creditors is also investigating Mashinsky for alleged wrongdoing.
