FTC Slaps Celsius Network with a $4.7B Fine

FTC Slaps Celsius Network with a $4.7B Fine
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As per the recent development, the United States FTC has slapped the bankrupt Celsius Network with a $4.7 billion fine. The judgment around the network’s permission to return its remaining assets to consumers as part of bankruptcy proceedings would also be immediately suspended. As per the official announcement by FTC, the Celsius Network and other affiliate companies would be banned from offering or promoting services that could be used to deposit, exchange, invest or withdraw assets.

The Celsius Network marketed a series of cryptocurrency products and services to its customers that include interest-bearing accounts, personal loans, and more. The FTC alleged that the co-founders marked the platform as a safe space for the users to deposit their cryptocurrency, misappropriating them at the same time.

Furthermore, the FTC also accused the Celsius Network of making approximately $1.2 billion in unsecured loans and also incorrectly claimed that it had a $750 million user insurance policy. Even during the bearish market of 2022, the co-founders continuously lied about the financial stability of the platform.

CEO Alex Mashinsky – Arrested

Apart from the allegations made by the FTC, the SEC and the CFTC have also slapped the Celsius Network with lawsuits. The CEO of the platform, Alex Mashinsky, was also indicted on seven fraud-related charges by the US Department of Justice and was taken into custody not too long after.

CEO Alex Mashinsky - Arrested

He allegedly mislead customers about the market value of the company’s value and interest in CEL. Plus, he made false and misleading public statements about his sales of CEL. However, he has pleaded not guilty to all accusations.  The Celsius Network filed for bankruptcy in July last year.

FTC Takes Aim at ChatGPT After the Celsius Network

In other news, OpenAI, the developer behind the infamous ChatGPT, has received a criminal investigative demand from the FTC. Currently, the FTC is actively investigating whether or not OpenAI used deceptive practices relating to risks of harm to consumers. At the same time, the FTC is also considering whether a monetary penalty for these practices would be in the interest of the public. Many analysts were critical of FTC’s latest actions and its growing reach into operations of tech platforms. 

Based on the document submitted to OpenAI, the agency has asked what language models were used in all of OpenAI’s products, how they were used and utilized, and how these products were trained for accuracy. The criminal investigative demand also asked about the advertising policy, risk assessment, as well as the protection of personal information.


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