Celsius Co-Founders Ordered to Pay Over $6 Million in FTC Settlement
Vexoda Newsroom
Shlomi Daniel Leon and Hanoch Goldstein, co-founders of Celsius Network, have been ordered by the Federal Trade Commission (FTC) to pay over $6 million for misleading customers about platform safety.
In a recent development, Shlomi Daniel Leon and Hanoch 'Nuke' Goldstein, former co-founders of crypto lending platform Celsius Network, were ordered to collectively pay over $6 million in settlements. This comes after the FTC alleged they misrepresented the safety of the Celsius platform before its collapse.
Under an order signed by US District Judge Denise Cote on Monday, Hanoch 'Nuke' Goldstein was required to pay $2.014 million, while Shlomi Daniel Leon had to pay $4.1 million. These settlements extend beyond former CEO Alex Mashinsky's April settlement of $10 million.
The FTC accused Celsius of falsely claiming it held sufficient reserves for withdrawals and maintaining a $750 million insurance policy covering customer deposits. Additionally, the platform was alleged not to have issued unsecured loans. The court found that top executives continued making such claims even as the company faced bankruptcy in July 2022.
The settlements also include bans on marketing or selling products related to depositing, exchanging, investing, or withdrawing assets for Leon and Goldstein. Mashinsky's case further illustrates the severe consequences of similar actions: he was sentenced to 12 years in prison after pleading guilty to commodities and securities fraud charges.
Celsius Network once held $25 billion in assets at its peak but owed users $4.7 billion when it filed for bankruptcy, highlighting the significant impact on investors during this period. The settlements reflect the consumer harm alleged by the FTC and will be credited against a broader judgment of $4.72 billion.
This development underscores increasing regulatory scrutiny in the crypto space, with more stringent measures being implemented across various jurisdictions to protect consumers from fraudulent practices.
Source: Cointelegraph. Summarized and rewritten by the Vexoda Newsroom. This is market news, not financial advice.