The New York State Attorney General has filed a lawsuit against the co-founder and former CEO of the bankrupt cryptocurrency lender Celsius Network.
New York Attorney General Letitia James announced a lawsuit against Alex Mashinsky for defrauding investors out of billions of dollars in cryptocurrency. James went on to say that 26,000 New Yorkers were among the hundreds of thousands of victims of Mashinsky.
“Alex Mashinsky, the former CEO of Celsius, promised to lead investors to financial freedom but instead led them down a path of financial ruin,” said Attorney General James. “The law makes it clear that making false and unsubstantiated promises and misleading investors is illegal.
Mashinsky is accused by Attorney General James of repeatedly making false and misleading statements about Celsius’ safety. Mashinsky, as the platform’s public face, frequently enticed investors to deposit with Celsius in exchange for high crypto yields.
However, James claims that Mashinsky made numerous false and deceptive statements in order to attract investors, including lying about the platform’s user numbers. Furthermore, despite repeatedly claiming that Celsius was safer than a bank, Mashinsky insisted on only making safe, low-risk investments. Mashinsky, according to James, routinely exposed investors’ assets to high-risk counterparties and strategies.
As Celsius lost hundreds of millions of dollars in these risky investments, Attorney General James claims Mashinsky misrepresented and concealed Celsius’s deteriorating financial situation. Finally, she claims that Mashinsky failed to register as a Celsius salesperson as well as a securities and commodities dealer.
Through her lawsuit against Mashinsky, James hopes to accomplish three things. First, she wants Mashinsky barred from ever again issuing, offering, or selling securities or commodities. She is also attempting to prevent him from serving as a director or officer of any New York-based company. Finally, James hopes to obtain compensation and restitution for investors.
Following a year-long investigation into the collapse, James is formally charging Celsius and Machinsky. She asked victims of any cryptocurrency collapse, including Celsius, to come forward with their testimonies a few months ago. The indictment, as well as the charges against Sam Bankman-Fried, should give those responsible for other large collapses pause. Three Arrows Capital (3AC) founders Zhu Su and Kyle Davies were recently subpoenaed on Twitter.
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