US SEC files lawsuit against Celsius and Alex Mashinsky
The United States Securities and Exchange Commission is taking action against Celsius Network, one of the cryptocurrency lending firms that collapsed in 2022.
The securities regulator filed a lawsuit against Celsius’ former CEO, Alex Mashinsky, on July 13, charging the executive and Celsius for raising “billions of dollars” through unregistered and fraudulent offers, as well as selling “crypto asset securities.”
In the complaint, the SEC argued that Mashinsky falsely promised investors a safe investment with its lending service known as the “Earn Interest Program.” Celsius and the executive also fraudulently manipulated the price of Celsius’ own crypto asset security, the Celsius (CEL) token, the SEC wrote.
The securities regulator specifically alleged that Celsius and Mashinsky were publicly misrepresenting “significant financial events and the financial condition of the company.” According to the regulator, such misrepresentation took place from the very beginning of the CEL initial coin offering in March 2018 until “days before Celsius halted customer withdrawals off its platform.”
Mashinsky was also reportedly arrested on Thursday morning, following a probe into the company’s collapse.
The SEC’s lawsuit came shortly after the Commodity Futures Trading Commission reportedly found that Celsius and Mashinsky broke several U.S. regulations before the company’s implosion last year.
On July 6, Bloomberg also reported that attorneys from the CFTC’s enforcement division found that Celsius misled investors and failed to register with the regulator, while Mashinsky broke several U.S. regulations.
The action and the arrest came on the same day with Celsius officially announcing that the firm has initiated voluntary Chapter 11 proceedings. Celsius has $167 million in cash on hand, the firm noted. According to Celsius, the funds will allow it to support “certain operations during the restructuring process.”
Related: Former Celsius CEO Alex Mashinsky reportedly arrested
“This is the right decision for our community and company,” Mashinsky said in the announcement. He added:
“We have a strong and experienced team in place to lead Celsius through this process. I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company.”
Mashinsky was previously sued by New York Attorney General Letitia James in January 2023. The complaint alleged that the Celsius founder and former CEO made numerous “false and misleading statements,” which led to investors losing billions.
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Panama’s capital city will accept cryptocurrency payments for taxes and municipal fees, including bus tickets and permits, Panama City mayor Mayer Mizrachi announced on April 15, joining a growing list of jurisdictions globally that have voted to accept such payments.
Panama City will begin accepting Bitcoin (BTC), Ether (ETH), Circle’s USDC (USDC), and Tether’s USDt (USDT) stablecoin for payment once the crypto-to-fiat payment rails are established, Mizrachi posted on the X platform.
Mizrachi said previous administrations attempted to push through similar legislation but failed to overcome stipulations requiring the local government to accept funds denominated in US dollars.
In a translated statement, the Panama City mayor said that the local government partnered with a bank that will immediately convert any digital assets received into US dollars, allowing the municipality to accept crypto without introducing new legislation.
Panama City joins a growing list of global jurisdictions on the municipal and state level accepting cryptocurrency payments for taxes, exploring Bitcoin strategic reserves to protect public treasuries from inflation and passing pro-crypto policies to attract investment.
Related: New York bill proposes legalizing Bitcoin, crypto for state payments
Municipalities and states embrace digital assets
Several municipalities and territories around the globe already accept crypto for tax payments or are exploring various implementations of blockchain technology for government spending.
The US state of Colorado started accepting crypto payments for taxes in September 2022. Much like Panama City said it will do, Colorado immediately converts the crypto to fiat.
In December 2023, the city of Lugano, Switzerland, announced taxes and city fees could be paid in Bitcoin, which was one of the developments that earned it the reputation of being a globally recognized Bitcoin city.
The city council of Vancouver, Canada, passed a motion to become “Bitcoin-friendly city” in December 2024. As part of that motion, the Vancouver local government will explore integrating BTC into the financial system, including tax payments.
North Carolina lawmaker Neal Jackson introduced legislation titled “The North Carolina Digital Asset Freedom Act” on April 10. If passed, the bill will recognize cryptocurrencies as an official form of payment that can be used to pay taxes.
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As digital assets gain mainstream adoption, establishing a legal framework for stablecoins is a “good idea,” said US Federal Reserve Chair Jerome Powell.
In an April 16 panel at the Economic Club of Chicago, Powell commented on the evolution of the cryptocurrency industry, which has delivered a consumer use case that “could have wide appeal” following a difficult “wave of failures and frauds,” he said.
Powell delivers remarks at the Economic Club of Chicago. Source: Bloomberg Television
During crypto’s difficult years, which culminated in 2022 and 2023 with several high-profile business failures, the Fed “worked with Congress to try to get a […] legal framework for stablecoins, which would have been a nice place to start,” said Powell. “We were not successful.”
“I think that the climate is changing and you’re moving into more mainstreaming of that whole sector, so Congress is again looking […] at a legal framework for stablecoins,” he said.
“Depending on what’s in it, that’s a good idea. We need that. There isn’t one now,” said Powell.
This isn’t the first time Powell acknowledged the need for stablecoin legislation. In June 2023, the Fed boss told the House Financial Services Committee that stablecoins were “a form of money” that requires “robust” federal oversight.
Related: Stablecoins are the best way to ensure US dollar dominance — Web3 CEO
Support for stablecoin legislation is growing
The election of US President Donald Trump has ushered in a new era of pro-crypto appointments and policy shifts that could make America a digital asset superpower.
Washington’s formal embrace of cryptocurrency began earlier this year when Trump established the President’s Council of Advisers on Digital Assets, with Bo Hines as the executive director.
Hines told a digital asset summit in New York last month that a comprehensive stablecoin bill was a top priority for the current administration. After the Senate Banking Committee passed the GENIUS Act, a final stablecoin bill could arrive at the president’s desk “in the next two months,” said Hines.
Bo Hines (right) speaks of “imminent” stablecoin legislation at the Digital Asset Summit on March 18. Source: Cointelegraph
Stablecoins pegged to the US dollar are by far the most popular tokens used for remittances and cryptocurrency trading.
The combined value of all stablecoins is currently $227 billion, according to RWA.xyz. The dollar-pegged USDC (USDC) and USDt (USDT) account for more than 88% of the total market.
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An appellate court has granted a joint request from Ripple Labs and the Securities and Exchange Commission (SEC) to pause an appeal in a 2020 SEC case against Ripple amid settlement negotiations.
In an April 16 filing in the US Court of Appeals for the Second Circuit, the court approved a joint SEC-Ripple motion to hold the appeal in abeyance — temporarily pausing the case — for 60 days. As part of the order, the SEC is expected to file a status report by June 15.
The SEC’s case against Ripple and its executives, filed in December 2020, was expected to begin winding down after Ripple CEO Brad Garlinghouse announced on March 19 that the commission would be dropping its appeal against the blockchain firm. A federal court found Ripple liable for $125 million in an August ruling, resulting in both the SEC and blockchain firm filing an appeal and cross-appeal, respectively.
However, once US President Donald Trump took office and leadership of the SEC moved from former chair Gary Gensler to acting chair Mark Uyeda, the commission began dropping multiple enforcement cases against crypto firms in a seeming political shift. Ripple pledged $5 million in XRP to Trump’s inauguration fund, and Garlinghouse and chief legal officer Stuart Alderoty attended events supporting the US president.
Related: SEC dropping Ripple case is ‘final exclamation mark’ that XRP is not a security — John Deaton
Despite support for the end of the case coming from both Ripple and the SEC, the August 2024 judgment and appellate cases leave some legal entanglements. Alderoty said in March that Ripple would drop its cross-appeal with the SEC and receive a roughly $75 million refund from the lower court judgment. It’s unclear what else may result from negotiations over a settlement in appellate court.
New leadership at SEC incoming
Acting chair Uyeda is expected to step down following the US Senate confirming Paul Atkins as SEC chair on April 9.
During his confirmation hearings, lawmakers questioned Atkins about his ties to crypto, which could create conflicts of interest in his role regulating the industry. In financial disclosures, Atkins stated he had millions of dollars in assets through stakes in crypto firms, including Securitize, Pontoro and Patomak.
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