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Celsius Network Slapped with $4.7 Billion Fine by FTC, Faces Permanent Ban

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In a significant blow to Celsius Network, the United States Federal Trade Commission (FTC) has imposed a staggering $4.7 billion fine on the New Jersey-based crypto lender. However, the FTC has indicated that the ruling could be temporarily suspended, allowing the insolvent company to meet its obligations and repay its customers.

The FTC announcement on July 13 also revealed a permanent ban on Celsius and its affiliated companies, prohibiting them from offering, marketing, or promoting any investment-related product or service.

The FTC leveled several accusations against Celsius, claiming that the company, co-founded by Alex Mashinsky, Shlomi Leon, and Hanoch Goldstein, tricked customers into storing their crypto assets on the platform. According to regulators, Celsius is marketing various crypto products and services under false promises to customers.

The FTC further alleged that the founders misappropriated over $4 billion worth of customer assets. However, the founders have yet to agree to the fine, indicating that the case will likely proceed to federal court.

Additionally, the FTC accuses Celsius of consistently misleading its customers about its financial health. While Celsius continued to take customer funds, he allegedly made $1.2 billion in unsecured loans and falsely claimed $750 million in user insurance policies. The FTC statement revealed that company executives enriched themselves by withdrawing large amounts of cryptocurrency from Celsius just two months before filing for bankruptcy while defrauding customers and preventing them from withdrawing their deposits.

Celsius’ problems do not end there, as the company is currently facing lawsuits from the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Additionally, Alex Mashinsky, the co-founder, faces seven charges from the US Department of Justice and is currently in custody. Last July, Celsius had filed for Chapter 11 bankruptcy.

The weight of the accusations and the ongoing legal battle overshadows the future of Celsius Network. Pending fines, bans, and lawsuits raise questions about the credibility and trustworthiness of companies, as well as the broader implications for the crypto lending industry.

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