Crypto Lender Celsius Co-Founder Sued Over False Statements to Investors

The Wall Street Journal reported that the New York Attorney General, Letitia James, is suing Alex Mashinsky, the co-founder of cryptocurrency lender Celsius Network, over allegations that he made false statements to investors and defrauded them out of billions of dollars in digital currency. The civil lawsuit was filed today, according to a report by The Wall Street Journal. Mashinsky is a co-founder of the now-bankrupt Celsius Network.

The New York Attorney General, Letitia James, announced a lawsuit against Alex Mashinsky, the co-founder of cryptocurrency lender Celsius Network, on January 5th. The lawsuit alleges that Mashinsky defrauded investors, including more than 26,000 residents of New York, out of billions of dollars worth of cryptocurrency. James claims that Mashinsky’s actions leading up to Celsius declaring bankruptcy, including misrepresenting the platform’s financial condition and failing to follow certain regulatory requirements, contributed to investor losses.

In a statement, James said, “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.”

According to James, Mashinsky promoted a false narrative through various media appearances, interviews, and social media posts. The lawsuit also claimed that Celsius customers were not as protected as those at traditional financial institutions because the platform was not subject to regulatory requirements.

The lawsuit sought to prevent Mashinsky from doing business in New York in the future, as well as to have him pay damages, restitution, and disgorgement to affected Celsius investors. In July 2022, Celsius filed for Chapter 11 bankruptcy, leaving many crypto users with assets locked on the platform and a significant financial shortfall. Mashinsky resigned as CEO in September, stating that his role had become an “increasing distraction” amid the financial struggles of Celsius users.