• The New York attorney general has filed a lawsuit against Celsius Network’s former CEO Alex Mashinsky for allegedly defrauding investors.
• Mashinsky is accused of violating the Martin Act and New York’s Executive and General Business Laws by allegedly misleading customers into depositing billions of dollars into digital assets within the cryptocurrency lending company.
• The motion seeks to prevent Mashinsky from „engaging in any business relating to the issuance, advertisement, or sale of securities or commodities in New York,“ as well as „directing Mashinsky to pay damages, restitution, and disgorgement.“
The New York attorney general, Letitia James, has announced the filing of a lawsuit against Alex Mashinsky, the co-founder and former CEO of Celsius Network LLC, for allegedly defrauding investors. According to James, Mashinsky violated the Martin Act and New York’s Executive and General Business Laws by allegedly misleading customers into depositing billions of dollars into digital assets within the cryptocurrency lending company.
Mashinsky is accused of using false and deceptive representations to induce customers into investing in Celsius Network, with him serving as the “public face” of the company and promising investors high yields with minimal risk. Despite these promises, the company struggled to generate enough revenue to meet the returns promised to investors and resorted to riskier investment strategies.
The lawsuit seeks to prevent Mashinsky from engaging in any business related to the issuance, advertisement, or sale of securities or commodities in New York, as well as ordering him to pay damages, restitution, and disgorgement. James argued that by taking such measures, New Yorkers would be protected from further harm.
The motion also noted that, since 2018, Celsius had been escalating its risk profile, taking on debt and investing in high-risk digital assets. Additionally, the motion highlighted that the company’s marketing materials failed to accurately explain the financial risks associated with investing in Celsius.
The filing of the lawsuit comes amid an ongoing investigation into Celsius by the U.S. Securities and Exchange Commission (SEC). As a result of the investigation, the SEC has frozen $2.4 million in assets related to Celsius’ operations.
If found guilty, Mashinsky could face serious consequences, including a potential prison sentence and significant fines. The outcome of the case could have far-reaching implications, not just for Mashinsky, but for the entire cryptocurrency industry.