According to various US media, Mr. Mashinsky and former CFO Roni Cohen-Pavon were arrested in New York. On the same day, federal prosecutors, the Securities and Exchange Commission (SEC) and the Federal Trade Commission struck.

Specifically, the founder and former CEO of the crypto bank faces seven charges, including fraud and manipulation. Combined, the maximum sentences on all charges total approximately 110 years in prison. The allegations have not yet been examined in court.

The CDPQ has already been selected for its reviews before injecting hundreds of millions in Celsius in October 2021. The evidence presented by the American authorities adds another layer. Shortly after the Quebec institution became an investor in the platform, employees described it as “a sinking ship,” the SEC pointed out. According to another employee, there was “no hope” and Celsius’s business model was “fundamentally broken.”

“On May 21, 2022, a Celsius manager admitted in an internal statement: “We don’t have a profitable service,” the American stock exchange watchdog added in a fifty-page document.

Celsius Network has been hit several times over the past year. US government agencies have previously likened his model to a Ponzi scheme, using an investor’s money to pay false returns to other investors or those who want their money back.

The platform has been insolvent for a year (July 14, 2022) after its depositors’ withdrawals were frozen. The latter are still trying to recover their cryptoassets.

“Mr. Mashinsky has multiplied false statements about the returns Celsius offers, its profitability, and the risks associated with entrusting its cryptoassets to the company,” US prosecutors emphasize in their lawsuit filed in the New York courts.

The CDPQ has already taken its blame in this case by ensuring that it will no longer invest in the virtual currency space. The pension fund manager declined to comment on his former business partner’s arrest on Thursday.

Mr. Mashinsky is also facing a civil lawsuit filed earlier this year by New York Attorney General Letitia James. She accuses the entrepreneur of multiplying false claims and deceiving his customers in recent years, while Celsius lost hundreds of millions of dollars in 2022. Mr. Mashinsky denied these allegations.

Last fall, a poll was taken under The press revealed that the Celsius Network founder’s business career was a lot less successful than we thought. Several inaccuracies were identified. Mr. Mashinsky had not responded to questions from The press.