CFTC Concludes Celsius “Broke The Rules”

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CFTC Investigators Conclude Crypto Lender Celsius, Ex-CEO Broke Rules

According to a Bloomberg report, Investigators at the Commodity Futures Trading Commission (CFTC) have concluded that bankrupt crypto lender Celsius Network and its former chief executive officer Alex Mashinsky broke several United States regulations by misleading investors before the company’s implosion in 2022. 

The report also states that the agency could file a case against Celsius and Mashinsky by the end of this month if a majority of the CFTC’s commissioners agree. 

Separate from this, the SEC and federal prosecutors in Manhattan have also been investigating Celsius, according to bankruptcy filings. Representatives for the SEC and the US Attorney’s Office for the Southern District of New York declined to comment on the status of those probes. 

Celsius’s popularity soared during the pandemic. The company offered loans, and paid interest rates on virtual token deposits that were higher than those in traditional finance. 

At the time, Mashinsky would regularly position offerings as being as safe as those available at banks. 

But last year’s collapse of the TerraUSD token and a general downturn in the crypto market caused risky bets by the firm to backfire. Celsius faced a flood of exits. In June 2022, it froze customer withdrawals. A month later the firm filed for bankruptcy protection. 

Celsius’s blow-up has already prompted legal action, including allegations from New York Attorney General Letita James that Mashinsky made false statements about the safety of the crypto platform and misrepresented the declining financial condition of the company. 

In a January lawsuit, James claimed that Mashinsky defrauded hundreds of thousands of investors – including more than 26,000 New Yorkers – out of billions of dollars. 

Mashinsky has sought to dismiss the New York state claim by arguing that the suit “demonstrates a fundamental misunderstanding of Celsius’s business, and Mashinsky’s role therein.” His lawyers also said James had cherry-picked statements that he had made online to make her case, and that Celsius’s offering couldn’t be considered securities or commodities because the lender had always offered a predetermined interest rate regardless of the business’s performance. 

A federal enforcement action against Celsius and Mashinsky would be the latest in a string of cases brought this year by US authorities. The CFTC was the first to sue Binance Holdings Ltd., the world’s largest crypto exchange, and its chief executive officer Changpeng Zhao, for allegedly allowing Americans to trade on the overseas platform.

The SEC has also sued Binance and Coinbase Global, Inc., the largest US crypto exchange. 


Both firms say they have not done anything wrong. 

Rostin Behnam, who leads the CFTC, recently told lawmakers that the regulator has brought more than 85 cases related to fraud and manipulation in the digital asset market, resulting in more than $4 billion in penalties and restitution. 

The CFTC says that Bitcoin and Ether, the two biggest cryptocurrencies, are commodities and that it has jurisdiction over them when there’s suspected fraud or manipulation in the market. The agency also has claimed turf over some crypto stablecoins and Bitcoin and Ether derivatives. 

Fahrenheit LLC, a group of bidders led by investment firm Arrington Capital, won an auction in May to acquire some of Celsius’s assets.

Twitter Receives Money Transmitter Licenses In Three US States

Twitter Payments LLC, the payments subsidiary of Elon Musk’s Twitter social network, has reportedly received regulatory approval via the grant of money transmitter licenses from three U.S. states – Michigan, New Hampshire, and Missouri. 

While the privileges granted by money transmitter licenses differ from state to state, they generally allow a company to send, receive, and transfer funds for and among customers, both nationally and internationally. They also permit currency exchange and the issuance of prepaid cards. 

Currently, it remains unclear exactly what Twitter Payments will offer users when it eventually rolls out. However, some people speculate it will palay a part in Elon Musk’s vision to build an app that will be the “WeChat for the West,” – an all-in-one platform that allows users to do pretty much everything they want, including making payments. 

Even assuming a clean sweep of approvals, Musk and CEO Linda Yaccarino have yet to offer many details. People familiar with the company’s plans indicate that Twitter Payments will initially offer fiat currency transaction services, perhaps similar to those provided by Stripe, Venmo and PayPal. 

In the future, the company reportedly intends to open the platform to cryptocurrency services. It’s also been rumored that Twitter Payments plans to offer its own token with a project called “Twitter Coin” and that the company will even unveil its own wallet. 

As Cointelegraph previously reported, all of this falls under Musk’s promise that Twitter would “do lots of dumb things,” another way of saying the company would adhere to the modern tech mantra of “move fast and break stuff.” 

Some of the changes have come across as polarizing. For example, in an effort to mitigate data scraping and system manipulation, Twitter tweaked the site’s rate limiter – a function that limits the number of posts a user can read in a given period – to a mere 600 posts per non-paying user. 

The site also recently restricted the ability to view posts to those who were logged into their Twitter accounts. This change was quietly rescinded on Wednesday, July 5, per reports from TechCrunch and Engadget.

Israeli Lawmakers Support Exempting Foreigners From Crypto Capital Gains Tax

A bill granting exemption and other tax benefits for digital asset holders in Israel has reportedly passed through a preliminary reading in the country’s parliament. If passed into law, the bill would exempt foreign residents from capital gains taxes on the sale of digital currencies and also reduce tax on crypto options (similar to stock options) for employees to about 25% from 50%. 

The bill reportedly has the coalition government’s support led by Prime Minister Benjamin Netanyahu. Dan Illouz, a lawmaker in Netanyahu’s Likud party, stated, 

“Up until now, workers in the crypto industry had to pay double the tax on their options compared to workers in the traditional high-tech industry. Moreover, foreign investors in the blockchain industry were not entitled to the same benefits as those entitled to investors in the traditional high-tech industry. This law amendment aims to balance the situation and eliminate the discrimination in taxation.” 

Israel has been working to integrate crypto into its local economy by regulating the sector, with the government proposing guidelines for the treatment of digital assets and requirements for stablecoins. The country’s securities regulator is set to supervise crypto assets. 

“Finance Minister Bezalel Smotrich, who has shown support for the bill, is signaling that Israel is embracing crypto. This bold decision aligns Israel with U.K. and European countries that actively promote the industry, generating employment opportunities through clear regulations,” ICBW3 co-founders Nir Hirschmann Rub and Shauli Rejwan said in a statement. 

With technology and crypto, Israel has the opportunity to compete with the major financial cities in the world such as Lundon and New York, Illouz said. 

“We must not miss it,” he added.

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Luke Baldwin
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