Alex Mashinsky, the former CEO of crypto lender Celsius, was arrested Thursday on federal securities fraud charges.

His arrest coincided with the bankrupt company’s agreement to pay a $4.7 billion settlement with government regulators, after the SEC and CFTC charged the exchange with a scheme to defraud investors out of billions.

The $4.7 billion settlement is one of the largest in the history of the FTC. It nearly matches the record fine of $5 billion imposed on Meta in 2019, and underscores what the FTC described as repeated deceptive practices by Celsius and Mashinsky.

The former CEO faces charges of securities fraud, commodities fraud, wire fraud and various securities manipulation.

Mashinsky and a co-defendant, Roni Cohen-Pavon, now face the possibility of decades in prison if convicted.

“Mashinsky misrepresented, among other things, the safety of Celsius’s yield-generating activities, Celsius’s profitability, the long-term sustainability of Celsius’ high rewards rates, and the risks associated with depositing crypto assets with Celsius,” federal prosecutors wrote in a statement.

The SEC claims that Mashinsky “misrepresented” his company’s “central business model and the risks to investors” when he previously said Celsius did not engage in risky trading and paid most of its revenue over to investors.

“None of these claims” were accurate, according to the SEC. In actuality, Celsius had reportedly defaulted on institutional loans that amounted to “hundreds of millions of dollars.”

Now, Celsius’ multibillion-dollar settlement with the FTC will only be paid once the company is able to return the remaining customer assets in upcoming bankruptcy proceedings.

Back in January, New York prosecutors accused Mashinsky of orchestrating a $20 billion fraud against investors.

Previous reports have also highlighted pervasive issues that plagued the crypto exchange prior to its bankruptcy filing in 2022.

With News Wire Services