Letitia James, the attorney general of New York, has filed a lawsuit against Alex Mashinsky, the co-founder and former CEO of Celsius Network LLC.
Mashinsky allegedly defrauded investors into depositing billions of dollars in digital assets within the cryptocurrency lending company, in violation of the Martin Act and New York’s Executive and General Business Laws, according to James.
“Between 2018 and at least June 2022, Defendant Alex Mashinsky engaged in a scheme to defraud hundreds of thousands of investors.”
Mashinsky is accused of deceiving customers
Mashinsky allegedly did so “by using false and misleading representations to induce” customers to deposit “billions of dollars in digital assets” with Celsius Network LLC, according to James. Mashinsky was Celsius’s “public face,” promising investors high returns with little risk.
However, when Celsius was unable to generate enough revenue to pay the promised yields on investors’ deposits, it allegedly pursued much riskier investment strategies.
The motion’s finer points
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 motion also stated that “New Yorkers had deposited a total of approximately $440 million on the Celsius platform” as of Dec. 31, 2021.
Mashinsky had informed investors that the Celsius earned interest account (EIA) model was “sleep to earn.” “You don’t have to do anything, you just go to sleep, and every Monday we pay you yield.”
To read our blog on “Celsius expect $70M in loan repayments, expand its runway cost,” click here
