Celsius Co-Founders Ordered to Pay FTC Over $6M for Alleged Misrepresentation

US regulators have ordered two former co-founders of Celsius to pay over $6 million in combined penalties for allegedly misrepresenting the safety of their crypto lending platform.

The Federal Trade Commission (FTC) has charged Hanoch 'Nuke' Goldstein, Celsius' former chief technology officer, with paying $2.014 million and Shlomi Daniel Leon, the firm's former chief strategy officer, with paying $4.1 million to settle FTC consumer protection allegations tied to Celsius' collapse.

The settlements also include marketing and sales bans affecting products or services that could be used to deposit, exchange, invest, or withdraw crypto assets, including a ban on Goldstein marketing or selling retail products or services that can be used to buy, sell, deposit, withdraw, distribute, or trade cryptocurrency.

The FTC's claims focus on alleged misstatements about Celsius' reserves, insurance coverage, and whether loans were unsecured. The regulator said Celsius falsely told customers it maintained sufficient reserves to satisfy withdrawal demands, claimed it had a $750 million insurance policy covering customer deposits, and represented that it did not issue unsecured loans.

The co-founders are being held responsible for the misconduct the FTC described in connection with how Celsius marketed its operations during the period leading up to the shutdown. The payments from Goldstein and Leon will be credited against a $4.72 billion judgment tied to an earlier resolution involving Alex Mashinsky, who agreed to pay $10 million and was banned from promoting asset-related products.