Celsius co-founders pay FTC $6.1m over false safety claims

Celsius Network co-founders Shlomi Daniel Leon and Hanoch Goldstein must pay more than $6 million to settle Federal Trade Commission charges that they misled customers about the platform's safety before its 2022 collapse.

"The FTC alleged that Celsius falsely told customers it held sufficient reserves to meet withdrawal demands, maintained a $750 million insurance policy covering customer deposits and did not issue unsecured loans," the agency said in a statement Monday. "Those promises were false."

Goldstein, the former chief technology officer, was ordered to pay $2.014 million under a judgment signed Monday by US District Judge Denise Cote. Leon, the former chief strategy officer, was ordered to pay $4.1 million under a separate order entered June 29. Both settlements permanently bar the executives from marketing or selling products or services used to deposit, exchange, invest or withdraw assets, the FTC said.

The settlements extend the legal fallout from Celsius's 2022 bankruptcy beyond former Chief Executive Officer Alex Mashinsky, who agreed to pay $10 million to the FTC in April and was sentenced to 12 years in prison in May after pleading guilty to commodities and securities fraud charges. The crypto lender, which held $25 billion in assets at its peak, owed users $4.7 billion when it filed for bankruptcy in July 2022. The payments from Goldstein and Leon will be credited against a broader $4.72 billion judgment reflecting consumer harm alleged by the FTC.

The case underscores the continuing regulatory scrutiny of former crypto lending executives and adds to the mounting financial penalties tied to Celsius's collapse. With the bankruptcy estate still working through creditor distributions, the FTC settlements represent another step in resolving liabilities from one of the industry's largest failures.

This article is for informational purposes only and does not constitute investment advice.