 So it finally happened. It looks like Alex Moshinsky is finally being arrested and it just happened today. A lot of things do unpack and thankfully I found someone who could help me unpack this the best which would be Mr. Simon Dixon from Bank of the Future. Simon, is it not a great day today? Robert, it's a crazy day. It's exactly one year since Celsius filed for Chapter 11 bankruptcy and one month prior to that when they paused on June the 12th 2022, my father passed away and they paused withdrawals at the same time. I then had to try and because I was a shareholder in Celsius. I wanted to see if I could support with a restructuring and then exactly about a month later when I told everyone this is going into bankruptcy in this fraud and cell token is in the middle of a criminal investigation. So I broke that on your channel about a year ago and today you invited me to speak on your channel not knowing that today would be the day that the news would be broken and that Alex Moshinsky is arrested. I did warn everybody that it would happen this month but I didn't know it was going to happen today and that just happens that we were scheduling doing the talk. Right it's crazy because we just did NFA live with Guy and Ben. We broke that and I had you on as a special guest unbeknownst to me about what was happening in the background. So let's go over this and break this down for everybody to understand it. So the first thing is this finally Alex is arrested. We're going to take a look at the article about what the actual stipulations are and what the things that are being said as far as legalities. Second one the New York Attorney General is also suing them and the question then is what is the defense here for Alex Moshinsky and lastly is Celsius token earned program of security. Who owns those tokens? So the first things first this is from Bloomberg and you can find this on multiple publications but here's what we have. Today the SEC, the CFTC and the FTC filed lawsuits against Moshinsky and the company. Prosecutors claim that from 2018 through June 2022 Moshinsky orchestrated a scheme to defraud customers of Celsius NLLC and its related entities. Moshinsky's lawyers didn't comment. I can understand why. The SEC alleged that Moshinsky and his company made misleading statements to encourage investors to purchase its cell token and to put money in the firm's earned interest program that promised returns as high as 17% on users crypto deposits. So break that down for us Simon. I guess that would go from there and what do you think about all this? How does this all work out? Yeah so the important thing to understand about Celsius is there was misrepresentation right from day dot. So Moshinsky funded Celsius through 50 million token cell but 18 million of that was shortfall because he wanted to make it look like the token cell was more popular and he actually promised to make that investment because they didn't want to reveal to customers that the token cell didn't sell out and later they papered up agreements because he never actually paid. He still owes the estate 18 million and he took the tokens anyway and then he figured out a way of amongst the directors patching that up. That was in the middle of an SEC investigation but around about 2020 I was in New York and I was looking at investing in companies that allowed you to borrow against your Bitcoin and would share the interest from those that wanted you and we thought it was an institutional peer-to-peer lending model. I'd been involved in peer-to-peer lending in the UK. It was a model that started around 2005 in the UK and this was the crypto equivalent and that was a complete lie. Basically it was an illegal hedge fund. They deviated from the institutional peer-to-peer lending model and they started actually acting like a hedge fund by investing in mining operations, venture capital, DeFi but the difference is that when you're a peer-to-peer lending model it's very you disclose the risks and you understand and you have your lending licenses and various other things. Once you become a security you're now a hedge fund. You have to disclose all those risks. You have to let people know what you're doing with the money and you have to follow a very strict mandate audit requirements and all that type of stuff. Mijinsky started losing money inevitably and never made a profit but represented to everybody that basically 80% of all the revenue was going to customers and they were keeping 20% but then they used the fact that there was a token, a sell token that sat on their balance sheet and Mijinsky took client money and then used that in order to manipulate the price of the sell token on FTX with Sam Bankman Freed and there was massive loans across three areas, capital, Celsius, FTX but the FTX allowed them to manipulate the price of sell token so that they could make the company look bigger than it actually was so they would take the tokens that were on the balance sheet that they printed for free, mark them to market price even though you could never sell them for that and then defrauded investors like me into thinking that there was you know billions of dollars of assets backing this company and then he used that as a way to tell everybody that they should empty out their retirement funds, their life savings, convert their dollars, even created products where you could take your IRA, convert it into a Celsius IRA, convert that to stable coins and then he would earn his 17% number was the highest number because obviously that was the number that Terra Luna was paying in that Ponzi scheme so you know and yeah and from 2020 it deviated from this peer-to-peer lending model, became a hedge fund, lost loads of money, had a multi-billion dollar hole in the balance sheet but represented to everybody that it was safer than a bank and that it was less risk than some of the banks were taking as well and so there is the problem, it started really with the sell token and over the years you know we actually got involved right at the end because they wanted to raise more money, a series B to fill the hole and his plan was that he had a multi-billion dollar hole, he was going to take client bitcoin, borrow against it and invest it all in a mining operation, try and create the next ryer or marathon, float it on NASDAQ and then use that money in order to fill the hole, keep it for shareholders but not actually you know disclose any of that to creditors and when Terra Luna blew up it exposed everything and mass withdrawals happened and then eventually the very last order to try and purchase sell token there was no stablecoins left and so the whole sell token collapsed and revealed this three billion dollar losses that Mijinsky and Daniel Lyon had accumulated for creditors and hidden from them all along. Yeah and that's so there's two things it's Alex Machinzi and I believe also Daniel Lyon has also been indicted as well. I don't think Daniel Lyon has which is very surprising to me, another person is Ronnie, I always forget his surname Ronnie Coven Poen, sorry I'm saying that wrong, I'm butchering the name. I stand corrected. Ronnie actually is still employed by Celsius today and he's actually applied for a bonus in order to get the company sold and out of bankruptcy and wound down and you know he's been taking a salary throughout this whole thing and yeah you know he's an orchestrator and he's one of the people that have been involved in this, I do want to say this broke as we were being interviewed so I haven't actually read the full thing I just know everything that I know about the case from before this so there may be new news that I haven't actually read yet. Yeah exactly this is a very breaking story so everybody watch the video at home just know that we're filling in the gaps as they become available and also there was this piece that was from the article and I want to talk about this and we'll get into you know what is this security but it was the regulators accused Mijinsky of misrepresenting and they said they falsely claimed the firm made 50 million from an ICO when it actually had raised less than 65% of its gold so they said that yes we made 50 million but they didn't make 50 million it was much less and I guess so speak on that then also let's talk about real quick the token itself is it a security and what about the earn program and who owns those tokens right now. Yeah so throughout the last year we've been I've been in court case after court case trying to get to the bottom of this and unwind this for creditors I should disclose I'm you know I wanted to take a small percentage of my wealth and borrow against my bitcoin as well so I had I have a claim it's transparent so you know I can't really hide it but it's like over a thousand bitcoin in total that made me one of the top 10 creditors and the large one of the largest individual creditors and so I've been working to try and get a recovery but built relationships with the 600,000 and there's about 10,000 active in our community you know the that got ripped off in this process so for the last year we've been doing Twitter spaces every week we've been doing a YouTube video updates creating plans of how to take all these assets but it was revealed when you know we we actually at bank to the future wanted to actually bid on the company just to give all of the funds to creditors back and all of the equity in the assets to creditors because we're the first regulated securities business so we had the capability of doing it and so we were involved in in that process there as part of that you know it was discovered that yes there was 18 million dollars that they represented they raised in the token sale that Mijinsky actually was meant to invest but never invested and completely hid that from everybody making it sound like the token was more popular now one of the interesting parts of the case right now is I was an equity investor and my equity became worthless as soon as you hit into bankruptcy but there's a case right now that's being fought because those that purchase sell token are kind of fit into two camps you've got the insiders that defrauded everybody so Mijinsky's largest sell token holder and he used that to represent you know he gave himself a load of free tokens that he said that he paid for and never paid for put them in Celsius and then told everybody use Celsius I'm the I put all my net worth on Celsius but really it was his sell token and then he was selling those sell token to customers over the counter and then putting that Bitcoin back but he withdrew all of his Bitcoin all of his Ethereum and left all his sell token in the estate when he knew it was going into bankruptcy and that's when he was going on a roadshow telling everybody everything's safe don't withdraw you know everything's fine there's no problems he was withdrawing his funds and telling everyone to deposit and he even went on Twitter and said if you deposit at Celsius right now I'll give you a thousand dollars if you're a new customer and various other things anyway there's so much to cover here I kind of go off on these tangents but yeah the sell tokens so one of the cases right now is bankruptcy code states that you get the petition that so the the day you file bankruptcy which was 13th of July 2022 the price of all the tokens on that date determines how many dollars the bankruptcy estate owes you now at that point Bitcoin was $19,000 and also there was a short squeeze organized where people were manipulating it was actually an insider at Celsius that started it and then they made it think it was a bottom-up community movement and Mijinsky was pushing everyone along and still to this day contacts all the sell token holders to try and join his side but they manipulated the price up to 81 cents and this has been investigated and they subpoenaed FTX to try and get the data on the market manipulation because that determines because the basically they believe that sell token is a security because he actually registered it as a security when he sold it with the SEC and the 81 cents actually determines how much they get which is hundreds of millions of dollars ran to the estate there's a bunch of insiders there's people that were giving it for free now remember how Mijinsky constructed it if you get the price up to 153 dollars then all of the employees get free tokens that's extracting value from the genuine victims and then some people were buying genuine victims bought Mijinsky's coins or Celsius's coins at like five dollars eight dollars six dollars but the reality is that that's now being determined the the bankruptcy lawyers worked on Lehman brothers and various other world calm you know various other bankruptcies they said in every case non-equity securities are known as what subordinated which means you get zero just like an equity holder and so they're going through a settlement at the moment but whether sell token is a security or not determines whether that can be subordinated so it becomes pretty interesting and that really ties into obviously the crypto agenda for what is securities and what aren't securities because they get treated differently as well I got you you know I I covered them a long time ago and I could have and I there was a documentation where I don't know when it was it was it was put out but it's an old video on my my other channel Dan DJ and where it said that sell was listed as a security at some point in time and then it got and then they they took it out and they said no it's not a security that was it but and I can't find a documentation anymore so I'll look that up later but I will just say that Simon I mean you got taken for a ride I got taken for a ride unfortunately the people that I talked about it on the channel they got taken for a ride but we all got lied to essentially and we all have our fun stuck on there you have a lot more than me I got a nice little six figures over there but again it's it's it's the the psychosis of the person that is telling the lies and they're coming in front of us and going no no everything's fine every you know just keep putting it in there's a special level of person that that is able to do that and there's very few people that can actually lie to your face that effectively and one of those guys would be like a Bernie Madoff and I think Alex Moshinsky is kind of in that that same category I could be wrong but that's just how I see it and then to to finish this up there was a piece in this very last section here New York Attorney General Leticia James she was she was actually the first and sued Alex Moshinsky in January for fraud so the question I have is this is going on but what is the defense on the side of Celsius Moshinsky and Co how are they saying no no no we're actually in the clear here and how does that all work yeah so this kind of relates to there's two types there's two defenses one is against the lies and the other is against whether it's a security or not and this ties into the earned program so there were many companies offering earned programs you know originally when I invested in the company we were represented that this is a peer-to-peer institutional loans that people you know they'd be sharing the interest and people institutions are willing to pay interest to borrow the coins and then they would be matched up and then they would share you know some of the interest with that but it would be over collateralized always over collateralized because if their bets went wrong then you could just do a margin call and clients wouldn't lose their money it would just cost the yield right think about it that's a very big difference if an institution is putting more collateral than they're borrowing then they're taking the risk and if the risk goes wrong then client money isn't on the line but what they did is they ended up doing under collateralized loans which means that the program the the process of offering interest on a you know on to credit to what's now creditors to customers is a security because they deviated away because now we were taking directional risk three hours capital was playing different games investing in lunar you know doing the GBTC arbitrage trade and then they didn't have enough collateral and so therefore the customers were taking directional risk that's a security and so the earned program is a security and if you look across the SEC they went to Voyager they went to Gemini they went to Genesis they went to Celsius and they said you're offering illegal securities and you need to disclose to your customers ensure they're suitable and they're not betting their life homes and retirement on some trader that they don't know what's actually going on and so that was really the issue right so now you've got a earned program that is considered a security Mijinsky comes along and says two things in his defense he said firstly creditors spent 10 million on an examiner report to investigate all this stuff and it was transparent a 600 page report on all the fraud that Mijinsky did by interviewing all the previous employees and various other things um but uh the yeah he says it turns out I told everybody that we would share a percentage of all the revenue and in his defense he said the examiner's right it was a lie and because it was a lie therefore it's the earned programs not a security because it wasn't dependent upon the efforts of our investments and the yield was all fake and we were just promising to pay people but it had no connection to what we were investing in or what we were doing because we were paying them anyway and so therefore he said yes you know it's not a security because we were just paying yield and the yield was fake defense one wow defense two is he's saying and it's okay that I lied to you because he used um what's the name of the person the Silicon Valley lady that defrauded everybody for the blood Doranus the Doranus founder yeah what's her name um what is lost me Elizabeth Holmes right Elizabeth he used the Elizabeth Holmes defense and the Elizabeth Holmes defense is kind of you know you're going up you're going down for 20 years and you try to get it down to 10 and he used the puffery defense puffery if you look it up if you look up puffery it says my lies were so ridiculous that you were never meant to believe them in the first place so he slapped everyone in the face that has been defending him and said you were never meant to believe my lies because it was just puffery and therefore um and because the yield was not connected to these actions therefore it's not a security those are his two defenses and he was arrested today despite the fact that New York Attorney General was doing it in the in the civil cases and now it's become a criminal case because of his complete not a misrepresentation what he calls puffery and his outright fraud that he says I'll use the fact that um we lied to say that it's not a security and therefore I didn't commit securities fraud so now he's done for seven council fraud and I've got to read the paper uh to go a little bit deeper into figuring out exactly what's come out today perfect so that would so Simon thanks for for coming on there's so much information coming on so fast really what everybody should be doing is uh just to make this simple there's two places you can find Simon a lagging a lagging information which will be youtube but if you want to be up to date you got to follow Simon on twitter and the link to his youtube channel and twitter will be in the link in the description you can check it out but if you want to know exactly what's going on up to the minute and have really essentially uh Simon do all the heavy lifting which is do it reading all the documents reading all the paperwork and telling you what's happening you definitely need to follow Simon so Simon anything else before we take off no I mean it's been such a rabbit hole one final thing that was interesting was the fact that the coins are actually on the move right now and all of them are being converted into bitcoin and if the reason behind that is because um if the underlying asset is a security then they could be dollarized and you'd have to pay out dollars and sell them which is what happened in the voyager case yeah um so the Binance and Coinbase listed all the things they consider securities like ADA and um you know Avalanche and various other things so Celsius got ahead of that they've converted them all to bitcoin and ETH so that the underlying asset um is not considered a security so it can be distributed to creditors but that was only possible because they basically said when you deposited these coins became property of Celsius which means that it's an illegal bank and it was engaging in fractional reserve banking and uh various other things so it's very very interesting there's lots of intricate details and one of the things even if you're not a Celsius creditor um I kind of wear two hats I wear my this is my deep project that I'm in at the moment but then I'm also writing my book and and helping people understand the greater impact that this has on central bank digital currencies bitcoin stable coins the wider crypto market so I take off my Celsius hat look at the grand macro trends and say because of these legal incomes the outcomes where I'm involved in intricate details um here's how it affects the whole market and the bigger geopolitical stuff which we often discuss um when I'm doing interviews with you Rob. Excellent well my man I gotta tell you the timing couldn't be more perfect I appreciate you coming back on the show again everybody you can find Simon's information in the description definitely follow him on Twitter and uh we'll bring you the best information we can thanks so much everybody like today's video thumbs up subscribe all the good stuff to both of us and uh we will see you on the next one thank you