The New York state authorities happened to have levied an amount running up to $50 million in the form of a penalty on Coinbase. Along with that, they have also sued the ex-CEO of Celsius, Alex Mashinsky. All of this was executed over two days, the reason being serious fraudulent activities where all of their investors were concerned. Mashinsky incidentally had already resigned from his job as the CEO of Celsius following the company’s filing for bankruptcy the year before.
According to a lawsuit duly filed by Letitia James, the New York State Attorney, it was indeed Mashinsky who was hood-winking the customers and misappropriating the funds with the false promotion of Celsius. There is a mention in the lawsuit that he was selling it as a haven compared to banks and other associated financial institutions. However, according to her allegations, the truth of the matter is that Celsius had actually been engaging in making all sorts of risky investment plans.
Celsius, however, offered a very high-interest rate, of 17%, to all customers, on their crypto deposits. According to Mashinsky, he was able to make the yield with the help of low-risk collateralized loans targeted at first-tier institutions, along with cryptocurrency exchanges and overcollateralized loans aimed at retail borrowers.
Despite all of this, the company was failing to accrue for itself sufficient earnings in order to fulfill the paying back of interest rates promised on the deposits of customers. This further happened to have aggravated the situation and forced his hand in the making of riskier loans. In order to even the scales, he began to pass out uncollateralized loan amounts to the tune of millions of dollars. His investments also were touching similar high figures in unregulated, decentralized finance platforms.
However, the NEW York State Department of Financial Services declared that Coinbase, which happens to be the biggest centralized crypto exchange in the US, would be shelling out $50 million in the form of a penalty. This was related to its compliance program and its shortcomings in it. In this regard, Coinbase is perfectly willing to invest $50 million towards its compliance program over the following two years.
According to the CEO and Founder of Coinbase, Brian Armstrong, they are all very serious regarding their professional commitments and will continue in the very same way. Their ultimate aim is to make the crypto arena as safe and secure as possible, both for themselves as well as all of those connected and concerned.