Celsius is currently going through a Chapter 11 bankruptcy proceeding.
Last week, the US CFTC found Celsius and Alex Mashinsky guilty of breaking several laws before Celsius collapsed in 2022.
Alex Mashinsky has been arrested and will be arraigned in court on Friday.
Celsius Network, a cryptocurrency lending company that collapsed in 2022, is the target of enforcement action by the US Securities and Exchange Commission (SEC).
According to a Bloomberg report, the SEC has sued Celsius Network and its former CEO Alex Mashinsky. The report, however, stated that specifics of the complaint were not immediately available.
The lawsuit comes days after the Commodity Futures Trading Commission (CFTC) determined that Celsius and Mashinsky had violated a number of American laws prior to the company’s collapse last year.
Alex Mashinsky arrested in New York
According to the report, Mashinsky was detained on Thursday morning as a result of an investigation into the company’s collapse. Although the former CEO had denied any wrongdoing, he will be arraigned on Friday, July 14.
CFTC enforcement division lawyers determined that Mashinsky violated several US regulations while Celsius Network misled investors and neglected to register with the regulator.
The SEC and CFTC investigations started immediately when Celsius formally announced that the firm had begun voluntary Chapter 11 proceedings.
The New York Attorney General Letitia James in January 2023 sued Mashinsky alleging that he made numerous “false and misleading statements” which led to investors losing billions.
According to the company, Celsius has $167 million in cash on hand. The money will enable Celsius to support “certain operations during the restructuring process,” the company claims.
Celsius (CEL) price
Just as was the case when the CFTC announced its findings, the price of CEL, Celsius Network’s native token, has dropped sharply following the news of the SEC lawsuit.
At press time, CEL was trading at $0.1543, down 3.74% in the last 24 hours. The token however hit a daily low of $0.1486 after the news broke. And while it successfully recovered from the fall resulting from the CFTC conclusion, it is not clear if it will fully recover from today’s fall.
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