- The lawsuit accuses Mashinsky of planning to swindle hundreds of investors.
- According to Ms. James’ office, over $440 million was put by over 26,000 New Yorkers.
The founder of the cryptocurrency-focused firm Celsius Network, Alex Mashinsky, was named in a civil lawsuit. Brought by the state of New York’s attorney general on Thursday. The lawsuit accuses Mashinsky of planning to swindle hundreds of investors. By persuading them to deposit billions of dollars’ worth of digital assets with his crypto-lending product.
Mashinsky is being prosecuted for allegedly infringing the Martin Act. Which gives Attorney General Letitia James broad powers to investigate and prosecute cases of securities fraud and other offenses.
Monetary Damages and an Injunction
The complaint alleges that Celsius’ former CEO lied to investors about the lender’s financial viability. And hid its perilous situation while it lost hundreds of millions of dollars on risky and dubious trades.
According to Ms. James’ office, over $440 million was put by over 26,000 New Yorkers into the insolvent Celsius Network as of December 31, 2021.
Ms. James is suing Mashinsky for monetary damages and an injunction barring him from engaging in any activity in New York related to the sale or issue of securities or commodities. She also wants to make it such the former CEO can’t work for any state-based companies in any capacity.
At the time of its introduction in 2017, Alex Mashinsky promoted Celsius as a safe and risk-free way to put money to work. Over the span of five years, the firm went from obscurity to becoming one of the leading crypto lenders and a custodian of over $20 billion in assets. The firm declared bankruptcy in July as the value of cryptocurrency dropped and withdrawals were halted.
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