Author: CryptoSlate

Translation: Deep Tide TechFlow

Deep Tide Guide: The three founders of the bankrupt storm Celsius are permanently banned by the FTC from engaging in core activities such as crypto deposit and withdrawal, trading, etc. This ban is more lethal than the $16.5 million fine—it follows the individuals, making it impossible to escape even if they change companies. Ironically, the fine can be offset by the money previously seized by the Department of Justice and the bankruptcy settlement, meaning that potentially no actual cash needs to be paid.

The co-founders of the now-bankrupt crypto lending platform Celsius now face a permanent court injunction, prohibiting them from engaging in most areas of crypto and asset service businesses.

The FTC has set the merging obligation for the founders at $16.5 million, but Goldstein’s ruling states it is $2.014 million.

Alexander Mashinsky and Shlomi Daniel Leon are prohibited from advertising, marketing, promoting, offering, or distributing products or services for depositing, exchanging, investing in, or withdrawing assets, nor may they assist in such activities.

Mashinsky's ban covers general assets, while Leon's ban specifically includes cryptocurrencies, banking, and financial assets. Both bans apply to actions taken directly by them or through intermediaries.

Goldstein's ban focuses on retail crypto business. He is prohibited from advertising, marketing, promoting, or selling retail products or services for buying, selling, depositing, withdrawing, distributing, or trading cryptocurrencies, nor may he assist in such sales and marketing activities.

The three bans also prohibit making substantial false representations about products and services. The ban prohibits obtaining or attempting to obtain customer information from financial institutions, including bank account details, login credentials, private keys, and wallet information, through false, fictitious, or fraudulent statements.

Mashinsky and Leon must also obtain explicit informed consent before disclosing consumers' non-public personal information.

These restrictions are consistent with the actions alleged by the FTC in its 2023 complaint. The agency accused Celsius of being marketed as safer than banks, promising withdrawals at any time, and advertising yields as high as 18.63%.

The FTC also accused the company of claiming to have sufficient reserves on June 7, 2022, and then freezing withdrawals and transfers five days later. Celsius filed for bankruptcy on July 13, 2022.

These bans follow the founders, extending beyond Celsius, including assistance provided to others. Mashinsky and Leon's bans also extend to work completed through intermediaries.

In the coming years, the founders must submit reports and maintain records to leave the FTC with tracking clues, also providing the court with grounds to enforce the injunctions. These bans apply to the three founders, demonstrating how consumer protection cases impose lasting restrictions on marketing custody, yield rates, and trading products.

Payments made via Department of Justice seizures and Celsius bankruptcy settlements can be counted towards the $16.5 million obligation.

Mashinsky's $10 million obligation can be satisfied through qualified Department of Justice seizures. Leon's $4.1 million obligation and Goldstein's $2.014 million provision can be offset by payments or waivers in the Celsius bankruptcy proceedings.

The legal channels are separate but economically overlapping, and these bans do not guarantee that Celsius creditors will receive additional compensation.

Funds actually received by the FTC may be used for consumer compensation or related relief, and funds not used for relief will be deposited in the U.S. Treasury.