The U.S. Department of Justice confirmed to CoinDesk that Alex Mashinsky was arrested on Thursday in New York following an investigation into Celsius’s collapse.

According to an indictment by the DOJ, Mashinsky, along with others, are accused of seven counts, including securities fraud, commodities, wire fraud, and conspiracy to manipulate CEL’s token price.

The U.S. Securities and Exchange Commission, Commodity Futures Trading Commission and Federal Trade Commission filed separate lawsuits against Mashinsky and Celsius in conjunction with the indictment.

The lending platform filed bankruptcy in July 2022. Crypto consortium Fahrenheit won a bid for its assets. Letitia , the New York Attorney General, sued Mashinsky in January for allegedly misleading investors regarding the firm’s state prior to its bankruptcy filing. Mashinsky called the allegations “baseless”, and claimed that they were based on online misinformation.

Mashinsky charges

The DOJ charged Mashinsky, Celsius’ Chief Revenue Officer Roni. Cohen-Pavon with orchestrating a “years long scheme” to deceive customers about the value of CEL and the interest of Celsius. In addition, the indictment stated that Mashinsky had made false and misleading statements to the public about his sales of CEL. According to a Bloomberg report, Cohen-Pavon also was arrested on Thursday.

Mashinsky presented Celsius as a modern bank where customers could deposit crypto assets safely and earn interest. Mashinsky, in reality, operated Celsius as a risky investment firm, accepting customer money under false pretenses.

The DOJ announced that it had reached a no-prosecution deal with Celsius, because the company accepted responsibility for the role they played in the alleged fraudulent scheme and was cooperating.

In a suit, the SEC accused Mashinsky and the firm of securities fraud. The SEC claimed that CEL’s Earn product and CEL itself were securities in its complaint.

In this case, Celsius sold CEL as a security …. The complaint stated that neither Mashinsky nor Celsius had filed or maintained a registration statement with the SEC in relation to their offers and sale of securities via the Earn Interest Program.

Gurbir Grewal, Enforcement Director of the SEC, said at a press conference on Thursday that defendants misled investors by “completely fabricating” their financial statements.

Grewal stated that “Today we hold Mashinsky and Celsius accountable for their deceit and lies, together with our federal partners,”

In a separate Complaint the CFTC accused Mashinsky and the company of a “scheme” to defraud thousands of customers, by misleading them about the safety and profitability its digital asset-based financial platform. CFTC said that despite deteriorating conditions in the market, the company “continued to promote the safety and viability” of Celsius and failed to disclose the losses to its customers.

Read more: Sky High Yields And Bright Red Flags – How Alex Mashinsky went From Bashing Banks To Bankrupting Celsius

The CFTC claims that the firm has violated federal commodities regulation, committed fraud, and failed to register and disclose relevant disclosure documents.

The FTC filed a complaint alleging that defendants assured customers Celsius had sufficient reserves to meet their obligations.

The FTC has announced that it reached a settlement with Celsius Network, “that will prevent it from ever handling the assets of consumers” and “block it from offering, marketing or promoting any products or services that could be used for depositing, exchanging, investing, or withdrawing any assets.”

The FTC has also accused former executives Shlomi Leon, Hanoch Goldstein (aka Nuke) and Mashinsky of tricking customers into transferring cryptocurrency onto the platform. The regulator stated that the three executives had not accepted the settlement and the case will be brought in federal court.

The FTC’s notice stated that “the companies also agreed on a judgment for $4.7 billion which will be suspended in order to allow Celsius to return any remaining assets to its consumers during bankruptcy proceedings.”

A CoinDesk query for comments was not responded to immediately by lawyers for Mashinsky Celsius or the SEC. At 11:30 am Eastern Time, the U.S. Attorney’s Office of the Southern District of New York will host a Press Conference on the Indictment.

After the publication of the article, Mashinsky’s lawyers told CoinDesk by email that Mashinsky “vehemently denied the allegations made today” and “he looks to vigorously defend himself in court against the baseless accusations.”

Jack Schickler contributed reporting. Amitoj Sing and Jack Schickler also contributed.

UPDATE: Added CFTC and FTC have filed suit.

UPDATE: Adds details from DOJ indictment.

UPDATE: Adds FTC Settlement and Details throughout.

UPDATE: July 13, 15:22 (UTC): First paragraph updated to reflect DOJ’s confirmation of Mashinsky’s arrest.

UPDATE: July 13, 15:47 (UTC): Adds DOJ’s statement about non-prosecution agreements.

UPDATE: Mashinsky’s attorneys add a comment.

UPDATE (July 13, 16:21 UTC): Adds Grewal quote.