New York’s attorney general on Thursday filed a lawsuit against Celsius Network founder Alex Mashinsky, for allegedly defrauding investors.
The lawsuit claimed that Mashinsky, between 2018 and June 2022, as CEO of Celsius Network, defrauded investors out of billions of dollars in digital currency by concealing the failing health of his now-bankrupt cryptocurrency lending platform.
Accordingly, Mashinsky lied to investors about the number of Celsius users, and the strategy to attract new users, pledging that the user’s money and deposits will be kept and used for low-risk investments. The lawsuit also alleged that the former Celcius CEO distorted the truth by claiming Celsius is safer than traditional banks, even though the company is not subject to any of the same regulations as banks.
Investors’ assets were then routinely exposed to high-risk counterparties and strategies, many of which resulted in losses that Mashinsky concealed from investors. The collapse of Celsius has left many individuals in financial ruin.
The New York government intends to ban Mashinsky from participating in any business activities in the state territory, in addition to compensating investors for damages.
Celsius is one of the crypto companies that had to declare bankruptcy during the “liquidity crisis” of the crypto market, with losses amounting to $1.2 billion.
Mashinsky stepped down as CEO of Celsius in September 2022 but has still faced a lot of criticism for his non-transparent trading practices with investors’ funds.
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