Former CEO of Crypto Platform Celsius Sued by AG James for Allegedly Defrauding Investors

Bernard Nash
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  • New York AG Letitia James filed a lawsuit against Alex Mashinsky, a co-founder and former CEO of Celsius Network LLC, for violating the Martin Act and New York’s Executive and General Business Laws by allegedly defrauding investors into depositing billions of dollars in digital assets with the cryptocurrency lending company.
  • According to the complaint, Mashinsky served as the “public face” of Celsius and promised investors high yields with minimal risk. However, when Celsius struggled to generate enough revenue to pay the promised yields on investors’ deposits, it allegedly adopted significantly riskier investment strategies, extending hundreds of millions of dollars in uncollateralized loans and investing in unregulated decentralized finance platforms. Mashinsky allegedly failed to disclose Celsius’s losses on these risky investments and actively discouraged investors from withdrawing their assets from the platform, until Celsius eventually filed for bankruptcy and disclosed that its liabilities exceeded its assets by more than a billion dollars.
  • The lawsuit seeks damages, restitution, disgorgement, and a permanent injunction preventing Mashinsky from engaging in any business relating to the issuance, advertisement, or sale of securities or commodities in New York, serving as a director or officer of any company doing business in New York, or engaging in fraudulent, deceptive, and illegal acts in violation of the Martin Act and Executive Law.
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