DOJ Takes Aim at Landlords and Crypto Fraudster in High-Stakes Cases

The U.S. Department of Justice (DOJ) has been busy this week, announcing two significant cases that have the potential to reshape the rental market and send a strong message to the crypto industry. On Tuesday, the DOJ filed an amended complaint against six of the nation's largest landlords, alleging an unlawful scheme to manipulate rents using algorithmic tools and sensitive data sharing. Additionally, the founder and former CEO of Celsius Network, Alexander Mashinsky, pleaded guilty to one count of commodities fraud and one count of securities fraud, admitting to defrauding investors out of billions of dollars.



DOJ Sues Six Large Landlords for Algorithmic Pricing Scheme

The DOJ, along with ten states, sued six large landlords this week, alleging an unlawful scheme to inflate rents using algorithmic tools and sensitive data sharing. The amended complaint, following an August complaint against property management software company RealPage, accuses landlords, including Cushman & Wakefield, Greystar Real Estate Partners, and Blackstone’s LivCor, of manipulating the rental market through a pricing algorithm developed by RealPage Inc.

The amended complaint highlights that the landlords, who collectively manage over 1.3 million rental units across 43 states, collaborated using RealPage’s pricing software. The DOJ claims this software utilized sensitive market data to recommend rental prices that would align with competitors, thereby eliminating the downward pricing pressure that competition typically enforces.

According to the DOJ, in addition to using RealPage’s algorithms, the landlords schemed to use each other’s sensitive information to set their rents via direct communication between managers, "call arounds" during which property managers would share information as part of a "market survey," discussing how to modify RealPage’s pricing methodology in "user groups" hosted by the software company, and sharing RealPage parameters.

DOJ Acting Assistant Attorney General Doha Mekki stated, "While Americans across the country struggled to afford housing, the landlords named in today’s lawsuit shared sensitive information about rental prices and used algorithms to coordinate to keep the price of rent high." This alleged collusion affected millions of renters already burdened by rising costs.

Celsius Founder Pleads Guilty to Multi-Billion Dollar Fraud and Market Manipulation Schemes

In a separate case, Alexander Mashinsky, the founder and former CEO of Celsius Network, pleaded guilty to one count of commodities fraud and one count of securities fraud. He admitted to defrauding investors out of billions of dollars through two fraudulent schemes at Celsius, the purported "bank" of the crypto industry. In the first scheme, Mashinsky misled Celsius’s customers about core aspects of the company he founded, including Celsius’s success and profitability and the nature of the investments Celsius made using customer funds. In the second scheme, Mashinsky illicitly manipulated the price of CEL, Celsius’s proprietary crypto token, while he was secretly selling his own CEL token at artificially inflated prices.

As part of his plea, Mashinsky has agreed to forfeit over $48 million in proceeds from his illegal schemes. U.S. Attorney Damian Williams said, "Alexander Mashinsky orchestrated one of the biggest frauds in the crypto industry... He made tens of millions of dollars selling his own CEL tokens at artificially high prices, leaving his customers holding the bag when the company went bankrupt."



These two cases highlight the DOJ's commitment to holding fraudsters accountable for their crimes and protecting consumers from anti-competitive practices. As the housing market and crypto industry continue to evolve, it is crucial for regulators to remain vigilant and address any emerging threats to the integrity of these markets. By taking action against landlords and crypto fraudsters, the DOJ sends a strong message that such behavior will not be tolerated and serves as a reminder to other industry players to act responsibly and ethically.