The founder of Celsius was permanently banned from the crypto industry, and the 16.5 million fine may be fully deductible
Author: CryptoSlate
Compiled by Deep Wave TechFlow
Original title: Celsius's three founders have been permanently banned from the crypto business, and the $16.5 million fine may not be worth a penny
Guide to Deep Wave: The three founders of bankruptcy and thunderstorm Celsius were permanently banned by the FTC from engaging in core businesses such as crypto deposits, withdrawals, and trading. This ban is more lethal than the $16.5 million fine — it will follow people, and they can't escape even if they change companies. What's even more ironic is that the fine can be deducted from money previously confiscated assets and bankruptcy liquidation by the Ministry of Justice; real money may not have to be spent at all.
The co-founder of bankrupt crypto lending platform Celsius is now facing a permanent court ban from engaging in most areas of the crypto and asset services business.
The FTC fixed the merger obligation for the founders at $16.5 million, although Goldstein's judgment stated that it was $2.04 million.
Alexander Mashinsky and Shlomi Daniel Leon may not advertise, market, promote, offer, or distribute products or services for depositing, exchanging, investing, or withdrawing assets, or assist in such activities.
Mashinsky's ban covers assets in general, while Leon's ban explicitly covers cryptocurrencies, banks, and financial assets. Both prohibitions apply when they are acting directly or through intermediaries.
Goldstein's ban focuses on retail crypto businesses. He must not advertise, market, promote, or sell retail products or services used to buy, deposit, withdraw, distribute, or trade cryptocurrencies, nor assist in such sales and marketing activities.
The three prohibitions also prohibit substantial misrepresentation of products and services. The ban prohibits obtaining or attempting to obtain customer information from financial institutions through false, fictitious, or fraudulent statements, including bank account details, login credentials, private keys, and wallet information.
Mashinsky and Leon must also obtain explicit informed consent before disclosing consumers' non-public personal information.
These restrictions are consistent with the actions the FTC alleges in the 2023 complaint. The agency alleges that Celsius is advertised as being safer than banks, promising to withdraw at any time, and advertising a yield of up to 18.63%.
The FTC also alleges that the company claimed to have sufficient reserves on June 7, 2022, and froze withdrawals and transfers five days later. Celsius filed for bankruptcy on July 13, 2022.
These bans will follow the founders, go beyond Celsius, and cover the assistance they provide to others. Mashinsky and Leon's ban also extends to work done through intermediaries.
Over the next few years, the founders must file reports and keep records, leaving a trail for the FTC and providing the court with a basis for enforcing the injunction. The bans apply to these three founders and show how consumer protection cases have imposed lasting restrictions on marketing hosting, yield, and transactional products.
Payments made through Department of Justice forfeiture and Celsius bankruptcy settlement can count towards the $16.5 million obligation.
Mashinsky's $10 million obligation could be met through qualifying Department of Justice forfeiture. Leon's $4.1 million obligation and Goldstein's $201.4 million clause can be offset by payment or exemption in Celsius's bankruptcy lawsuit.
Legal channels are separate but economically overlapping, and these prohibitions do not guarantee additional payments to Celsius creditors.
Funds actually received by the FTC may be used for consumer compensation or related relief, and funds not used for relief will be deposited into the US Treasury.
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