Former Celsius CEO arrested, company agrees to pay $4.7 billion settlement
Alex Mashinsky, Celsius CEO on stage in Lisbon for Web Summit 2021
Piaras Ó Mídheach | Sportsfile | Getty Images
Former Celsius CEO Alex Mashinsky was arrested Thursday on federal securities fraud charges, a source told CNBC as the bankrupt crypto exchange agreed to pay a $4.7 billion settlement with government regulators.
The exchange was also charged by the SEC and CFTC with scheming to defraud investors out of billions. The $4.7 billion settlement is one of the largest in the FTC’s history, close to the record $5 billion fine levied against Meta in 2019, and highlights what the FTC described as repeated deceptions by Celsius and Mashinsky.
Federal prosecutors also charged Mashinsky with securities, commodities, and wire fraud, as well as various securities manipulation and fraud charges. If convicted, Mashinsky and a co-defendant, Roni Cohen-Pavon, face decades in prison.
Mashinsky pleaded not guilty to the fraud charges in New York federal court.
“Mashinsky misrepresented, among other things, the safety of Celsius’s yield-generating activites, Celsius’s profitability, the long-term sustainability of Celsius’ high rewards rates, and the risks associated with depositing crypto assets with Celsius,” federal prosecutors said in a charging document.
The settlement, announced by the FTC, will not be paid until the company is able to return what remains of customer assets in bankruptcy proceedings.
The concurrent SEC proceedings are against Mashinsky and Celsius, and like the federal charges allege that Mashinsky misled investors and fraudulently manipulated the price of Celsius’ exchange token, CEL.
The SEC has alleged that Mashinsky and his company “misrepresented” the company’s “central business model and the risks to investors” by allegedly claiming Celsius did not engage in risky trading and paid most, but not all, of the company’s revenue over to investors.
“None of these claims,” the SEC alleged, were true. Celsius had allegedly experienced, for example, “hundreds of millions of dollars” worth of defaults on its institutional loans.
Both the charging documents from New York federal prosecutors and the SEC complaint also describe Celsius’ exchange token as a security. The definition of a security and the SEC’s oversight over crypto markets has been hotly contested by other crypto exchanges in recent months.
“Alex vehemently denies the allegations brought today,” Mashinsky’s counsel Jonathan Ohring told CNBC. “He looks forward to vigorously defending himself in court against these baseless charges.”
Earlier this year, New York prosecutors accused Mashinsky of orchestrating a $20 billion fraud against investors. CNBC previously reported on pervasive, yearslong issues that plagued the crypto exchange well before it filed for bankruptcy in 2022.
— CNBC’s Jim Forkin contributed to this report.
Cheng Xin | Getty Images
Okta on Tuesday topped Wall Street’s third-quarter estimates and issued an upbeat outlook, but shares fell as the company did not provide guidance for fiscal 2027.
Shares of the identity management provider fell more than 3% in after-hours trading on Tuesday.
Here’s how the company did versus LSEG estimates:
- Earnings per share: 82 cents adjusted vs. 76 cents expected
- Revenue: $742 million vs. $730 million expected
Compared to previous third-quarter reports, Okta refrained from offering preliminary guidance for the upcoming fiscal year. Finance chief Brett Tighe cited seasonality in the fourth quarter, and said providing guidance would require “some conservatism.”
Okta released a capability that allows businesses to build AI agents and automate tasks during the third quarter.
CEO Todd McKinnon told CNBC that upside from AI agents haven’t been fully baked into results and could exceed Okta’s core total addressable market over the next five years.
“It’s not in the results yet, but we’re investing, and we’re capitalizing on the opportunity like it will be a big part of the future,” he said in a Tuesday interview.
Revenues increased almost 12% from $665 million in the year-ago period. Net income increased 169% to $43 million, or 24 cents per share, from $16 million, or breakeven, a year ago. Subscription revenues grew 11% to $724 million, ahead of a $715 million estimate.
For the current quarter, the cybersecurity company expects revenues between $748 million and $750 million and adjusted earnings of 84 cents to 85 cents per share. Analysts forecast $738 million in revenues and EPS of 84 cents for the fourth quarter.
Returning performance obligations, or the company’s subscription backlog, rose 17% from a year ago to $4.29 billion and surpassed a $4.17 billion estimate from StreetAccount.
This year has been a blockbuster period for cybersecurity companies, with major acquisition deals from the likes of Palo Alto Networks and Google and a raft of new initial public offerings from the sector.
Okta shares have gained about 4% this year.
WATCH: Earnings will drive small cap outperformance, says Bank of America’s Jill Carey Hall
-
Sports2 years agoStory injured on diving stop, exits Red Sox game
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports3 years agoButton battles heat exhaustion in NASCAR debut
-
Sports3 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment3 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment1 year agoHere are the best electric bikes you can buy at every price level in October 2024