Breaking: Celsius Ex-CEO Alex Mashinsky Sued By New York’s Attorney General

On Thursday, the attorney general of the state of New York filed a civil lawsuit against Alex Mashinsky, founder of the crypto-focused company Celsius Network; accusing him of plotting to defraud hundreds of investors by inducing them to deposit billions of dollars in digital assets with his crypto-lending product. Mashinsky is charged with breaking the state’s Martin Act, which provides Attorney General Letitia James extensive authority to pursue civil & criminal charges involving securities fraud and other violations.

Celsius’ Alex Mashinsky Sued

According to the lawsuit, Celsius’s former CEO misled investors about the lender’s financial stability and concealed its precarious status when it lost hundreds of millions of dollars on risky and questionable bets. Mashinsky made the erroneous notion that Celsius lent assets to only reliable organizations and that it was a safer alternative to the banks.

While speaking on Celsius’ fraudulent activities & its following bankruptcy, Ms. James, a prominent Democrat was quoted as saying:

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.

Read More: Polygon-Based Streaming App Partners With Samsung To Empower Web3 Users

As of 31st of December 2021, the office of Ms. James reported that more than 26,000 residents of New York had deposited around $440 million into the now-bankrupt Celsius Network.

Severe Charges To Be Levied

In addition to seeking restitution and damages, Ms. James is demanding that Mashinsky be prohibited from conducting business in the state of New York — that is in any way connected to the issuance or sale of securities and commodities. In addition to that, she further wants to prevent the former CEO from holding any official positions in businesses that are active in the state.

In 2017, Alex Mashinsky released Celsius, advertising it as a secure and risk-free investment option. The company expanded rapidly over the course of five years, becoming one of the top crypto lenders and eventually handling over $20 billion in assets. In July, as the price of cryptocurrencies plummeted and withdrawals were frozen, the company filed for bankruptcy.

Also Read: Check Out The Top 10 DeFi Lending Platforms Of 2023