The consequences of cryptocurrency lender Celsius Network's stormy 2022 are still being felt years after its bankruptcy filing.
The former CEO of the now-defunct cryptocurrency lender Celsius Network, Alex Mashinsky, is being sued for allegedly scamming investors by Letitia James, the attorney general of New York State.
Mashinsky is the most recent disgraced executive to be charged with a crime as a result of the demise of the bitcoin industry. While operating without being registered as a salesperson or a dealer in commodities and securities, the CEO is accused of misleading clients about Celsius' deteriorating financial status.
Mashinsky "routinely" exposed investors to high-risk methods that resulted in losses that the company's CEO concealed from clients, the Attorney General's office claims, while misrepresenting low-risk investments and dependable lending partners.
He allegedly overstated safety, strategies, and user counts as well, according to the lawsuit. James alleges that Celsius' previous CEO defrauded over 26,000 investors in the state, and that some of them suffered "financial devastation."
“As the former CEO of Celsius, 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. Today, we are taking action on behalf of thousands of New Yorkers who were defrauded by Mr. Mashinsky to recoup their losses. My office will stay vigilant and ensure that bad actors trying to take advantage of New York investors are held accountable,” said Attorney General James.
Mashinsky is not allowed to conduct business in New York, according to the state of New York. It wants him to repay investors for losses and give various forms of restitution, including with barring him from operating any businesses in New York state.
According to a statement from Celsius, as of a news release from September 2022, Mashinsky is no longer employed by the company and is not involved in its administration.
A judge found on Wednesday in a drawn-out bankruptcy case involving the company in federal bankruptcy court that digital assets of users stored in Earn accounts were deemed the company's property due to the terms of service.