Celsius Network and its former CEO are probably not having a good day

July 13, 2023 ndowd

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Earlier today, the now-bankrupt crypto lending firm Celsius Network and its former CEO and co-founder Alex Mashinsky faced several lawsuits from three separate American entities: The U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the Federal Trade Commission (FTC).

Bloomberg also reported that Mashinsky was arrested and charged with fraud today, a person familiar with the matter said.

Mashinsky and Celsius’ chief revenue officer, Roni Cohen-Pavon, were charged by the U.S. District Court for the Southern District of New York on Tuesday for allegedly orchestrating a “scheme to defraud customers of Celsius Network,” according to a previously sealed indictment.

These suits come at a time when the SEC, and U.S. agencies in general, are cracking down on the crypto industry. Earlier this week, the U.S. government accused a cybersecurity professional of hacking a cryptocurrency exchange and stealing around $9 million in cryptocurrency, in what looks like a case of an ethical hacker turning rogue, then trying to appear ethical again.

Last month, the SEC sued the two largest crypto exchanges, Binance and Coinbase, for separate reasons, but both lawsuits alleged the companies were violating U.S. securities laws. And in early June, the U.S. Department of Justice charged two Russian nationals for hacking and causing the subsequent collapse of Mt. Gox, once one of the largest and most popular crypto exchanges. Mt. Gox shut down in 2014 after filing for bankruptcy when the theft was revealed, and then was ordered to liquidate.

These are just a few of the charges and suits that come to mind. But there were (and I’m sure will be) plenty more as the U.S. regulators keep a close eye on the crypto industry.

The TLDR? Celsius and Mashinsky are in extremely hot water. And this could be just the beginning of a long series of lawsuits and charges for them and the industry at large.

This week in web3

The latest pod

For this week’s episode, Jacquelyn interviewed Maria Shen, a general partner on the investment team at Electric Capital, an early-stage venture firm focused on crypto, blockchain, fintech and marketplaces.

Before Electric Capital, Maria was the CTO and co-founder of Bambify, a startup that helped small to medium-sized businesses create more efficient supply chains with manufacturers globally. Prior to that, she worked at Microsoft.

In March 2022, the firm announced that it closed $1 billion for a pair of crypto funds — a $400 million vehicle for making equity investments in startups and a $600 million fund intended to invest directly in crypto tokens. Its website currently showcases a portfolio with about 75 investments with crypto startups like Magic Eden, ConsenSys and Bitwise, to name a few.

More recently, Electric Capital put out a report that showed the number of blockchain developers in the U.S. has declined every year since 2017, dropping to 29% last year from 40% in 2017. We dove into what that report really means and how it will affect the growth of developers domestically and internationally.

We discussed what crypto sectors Maria is watching for investments, why she’s betting big on NFTs and the general venture capital market sentiment.

We also talked about:

U.S. regulatory impact on investments
The bear market
Trends she’s following
Advice for founders

Subscribe to Chain Reaction on Apple Podcasts, Spotify or your favorite pod platform to keep up with the latest episodes, and please leave us a review if you like what you hear!