The former CEO of the fallen Celsius crypto lending company, Alex Mashinsky, and the company’s chief revenue officer, Roni Cohen-Pavon, have been arrested on charges of committing securities fraud, according to Bloomberg. On Thursday, the Justice Department unsealed charges against Mashinsky and Cohen-Pavon for inflating the price of Celsius’ crypto token, called CEL, while lying to Celsius customers about the token, their activities, and the company’s overall health.

The DOJ claims Mashinsky and Cohen-Pavon “illicitly manipulated the price of CEL,” causing investors to buy the token at inflated prices. The DOJ claims that selling their tokens, even as Mashinsky told Celsius customers he wasn’t selling, pulled in $42 million for Mashinsky and $3.6 million for Cohen-Pavon.

In one WhatsApp conversation from October 2021 cited by the DOJ, Cohen-Pavon responds to Mashinsky’s complaints that the price of CEL is going down despite new users joining Celsius, stating:

The issue is that people are selling and no one is buying except for us. The main problem was that the value was fake and was based on us spending millions ( ~8M a week and even more until February 2020) just to keep it where it is. This week we spent ‘only’ $4M (on top of the rewards) and the price is still going down.

In response, prosecutors write that Mashinsky said, “Does doge coin value real? How about the $SB for Solana. Everyone knows what these tokens are and want to buy them because they think price is going up.”

Prosecutors also accuse Mashinsky and Cohen-Pavon of portraying Celsius as a place where customers could “safely” store crypto assets and earn interest. However, the DOJ alleges Mashinsky operated Celsius as a “risky investment fund,” where he would take “customer money under false and misleading pretenses.”

In addition to Mashinsky and Cohen-Pavon’s arrests, Celsius also faces complaints from three federal agencies, including the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the FTC. All three agencies accuse Celsius and Mashinsky of fraud.

A proposed settlement between Celsius and the FTC accuses Celsius of participating in “deceptive and unfair acts” and fines the company $4.7 billion. It also charges Mashinsky and two former executives for “tricking consumers” into believing that their assets “would be safe and always available” and bans the company from handling customer assets.

“Celsius touted a new business model but engaged in an old-fashioned swindle,” said Samuel Levine, the director of the FTC’s Bureau of Consumer Protection, in a statement. “Today’s action banning Celsius from handling people’s money and holding its executives accountable should make clear that emerging technologies are not above the law.” 

Celsius, which was one of the largest crypto lenders, ran into trouble last year and filed for Chapter 11 bankruptcy. In 2021, the company’s chief financial officer, Yaron Shalem, was arrested in Israel, while some accused Celsius of operating as a Ponzi scheme.