• New York Attorney General Letitia James has filed a civil lawsuit against Celsius co-founder and former CEO Alex Mashinsky, accusing him of defrauding investors out of billions of dollars.
• The lawsuit alleges that Mashinsky made false and unsubstantiated promises and misled investors, violating the Martin Act and causing investors to lose millions of dollars.
• Celsius was forced to file for bankruptcy protection in 2022 following the collapse of crypto hedge fund Three Arrows Capital (3AC).
New York Attorney General Letitia James has taken legal action against Celsius co-founder and former CEO Alex Mashinsky, accusing him of defrauding investors out of billions of dollars. The civil lawsuit alleges that Mashinsky made false and unsubstantiated promises to investors and misled them, resulting in the loss of millions of dollars.
The Attorney General alleges that Mashinsky knowingly concealed information from investors and advertised the Celsius platform as being “safer than a bank” when, in fact, the company was taking “risky investments” with their funds. In addition, the lawsuit claims that Mashinsky violated the Martin Act, a law that allows state officials to investigate and prosecute securities and commodities fraud.
Celsius was one of the world’s leading crypto lending companies prior to its bankruptcy filing in 2022. This was part of a series of bankruptcies among crypto companies that were caused by the collapse of crypto hedge fund Three Arrows Capital (3AC).
Since then, Celsius has been restructured and is now owned by two companies, Celsius Network LLC and Celsius Network Ltd. The company is now focused on providing its users with access to banking, trading, and lending services. It also has a new mission of “empowering everyone to become financially independent.”
The lawsuit against Mashinsky is just the latest in a series of legal actions taken by the Attorney General against cryptocurrency companies. Earlier this year, the AG’s office filed a lawsuit against Bitfinex and Tether, alleging that the companies had defrauded investors out of billions of dollars.
It remains to be seen what the outcome of the lawsuit will be. However, the case serves as a reminder that cryptocurrency companies must be held to the same standards as other financial institutions. Investors should always do their due diligence before investing in any cryptocurrency company, and should be aware of the risks associated with such investments.