New York Attorney General Letitia James filed a lawsuit against Alex Mashinsky, former CEO of the bankrupt crypto lending platform Celsius Network, for defrauding investors – including 26,00 people from NY – out of billions of dollars worth of cryptocurrency.
According to the lawsuit, James argued Mashinsky repeatedly made false and misleading statements about the state of Celsius and its investment products. While promising people heaven, James noted Mashinsky delivered hell to Celsius investors knowingly.
Notably, Celsius lost millions of dollars to risky businesses that included crypto assets and did not reveal the company’s financial statements to the investors until the worst hit. Additionally, the lawsuit argues that the former Celsius CEO failed to register as a securities and commodities dealer let alone as a salesperson.
As such, the lawsuit wants the court to ban Mashinsky from doing business in New York and require him to pay damages, restitution, and disgorgement.
“As the former CEO of Celsius, Alex Mashinsky promised to lead investors to financial freedom but led them down a path of financial ruin,” said Attorney General James. “The law is clear that making false and unsubstantiated promises and misleading investors is illegal. Former CEO Of Celsius Network Sued For Defrauding Investors Out Of Billions.
Today, we are taking action on behalf of thousands of New Yorkers who were defrauded by Mr. Mashinsky to recoup their losses. My office will stay vigilant and ensure that bad actors trying to take advantage of New York investors are held accountable.”
Attorney General Condemns Crypto Companies Operating Like Celsius
According to Attorney General James, most of the Celsius deposits from New Yorkers were from people’s lifetime savings. While continuing to warn cryptocurrency traders to be careful with projects that promise hefty returns, James has urged employees in the blockchain industry to report businesses operating fraudulently.
In the past two years, New York Attorney General James has focused on crypto projects preying on people’s money. For instance, In September 2022, James sued Nexo Inc. for operating illegally and defrauding investors.
In June 2022, James warned New Yorkers about investing in cryptocurrencies after the market lost over $2.2 trillion in unregulated businesses.
In the same month, James reached a nearly $1 million settlement with BlockFi for offering unregistered securities.
The lawsuit comes a day after Judge Martin Glenn, the chief bankruptcy judge in the Southern District of New York, ruled Celsius can liquidate customers’ stablecoins to meet costs associated with case proceedings.