Key Points:
Former Celsius CEO Alex Mashinsky is being sued by New York State Attorney General Letitia James for allegedly scamming investors of “billions of dollars” in cryptocurrency.
According to the Attorney General’s office, Mashinsky misrepresented low-risk investments and dependable lending partners.
The state of New York wants to forbid Mashinsky from conducting business there. He is also required to make restitution to investors and pay other penalties.
Long after it filed for bankruptcy, crypto lender Celsius Network is still dealing with the effects of its turbulent 2022.
Letitia James, the attorney general of New York State, has filed a lawsuit against Alex Mashinsky, the former CEO of the defunct cryptocurrency lender Celsius Network, for allegedly defrauding investors.
Mashinsky is the latest disgraced executive to face legal repercussions following the collapse of the cryptocurrency market. The CEO allegedly deceived clients about Celsius’ deteriorating financial situation while operating without registering as a salesperson or a dealer in commodities and securities.
According to the Attorney General’s office, Mashinsky misrepresented low-risk investments and dependable lending partners while “routinely” subjecting investors to high-risk strategies that led to losses that the company’s CEO concealed from clients.
The lawsuit claims that he also misrepresented safety, tactics, and user numbers. Over 26,000 investors in the state were allegedly duped by Celsius’ former CEO, and James claims that some of them experienced “financial ruin.”
“As the former CEO of Celsius, Alex Mashinsky promised to lead investors to financial freedom but led them down a path of financial ruin. The law is clear that making false and unsubstantiated promises and misleading investors is illegal. 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,” said Attorney General James.
The state of New York wants to forbid Mashinsky from conducting business there. Along with preventing him from running any businesses in New York state, it also wants him to pay investors back for losses and provide other forms of compensation.
According to a statement from Celsius, Mashinsky is no longer employed by the company and is not involved in its administration as of an announcement from September 2022.
In a protracted bankruptcy proceeding involving the corporation in federal bankruptcy court, a judge ruled on Wednesday that digital assets of consumers kept in Earn accounts were considered the company’s property because of the terms of service.
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