By misrepresenting Celsius’s financial situation, Alex Mashinsky’s actions prior to the platform’s bankruptcy allegedly contributed to investor losses.
Letitia James, the attorney general of New York, has filed a lawsuit against Alex Mashinsky, claiming that the CEO and founder of Celsius made a number of “false and misleading statements” that caused investors to lose billions of dollars.
The lawsuit, which allegedly involved defrauding investors, including more than 26,000 residents of the United States state, of billions of dollars worth of cryptocurrency, was announced by the New York Attorney General’s office on January 5. James claims that Mashinsky’s actions prior to Celsius’s bankruptcy caused investor losses because he misrepresented the platform’s financial condition and failed to comply with certain regulatory requirements.
“As the former CEO of Celsius, Alex Mashinsky promised to lead investors to financial freedom but led them down a path of financial ruin,” said James. “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.”
James stated that Celsius customers did not have the same protection as those at traditional financial institutions due to the platform not being subject to regulatory requirements. This was in addition to Mashinsky allegedly pushing a false narrative through appearances at conferences, on social media, and in interviews. The lawsuit sought to compel Mashinsky to pay damages, restitution, and disgorgement to Celsius investors who had been harmed as well as to prevent him from ever “doing business in New York” again.
In July 2022, Celsius filed for Chapter 11 bankruptcy, leaving many crypto users with platform-locked assets and a billion-dollar balance sheet gap. In September, Mashinsky resigned as CEO, citing users’ “difficult financial circumstances” as an “increasing distraction” from his job.