former Celsius boss sued in US

The New York State Attorney announced Thursday (Jan. 5) that she is filing fraud charges against Alex Mashinsky, the founder and former CEO of cryptocurrency lending firm Celsius, which went bankrupt last year. “Alex Mashinsky promised to lead his investors to financial freedom, but he led them to ruin”wrote Letitia James in a press release. “The law is clear that it is illegal to make false promises and lie to investors. ยป

Celsius had frozen all customer withdrawals until June 2022 before filing for bankruptcy in July. The company had made some very risky investments just before the cryptocurrency market went into a very steep decline and accumulated a loss of over 1 billion. Before filing for bankruptcy, Mr. Mashinsky and other company executives withdrew millions of dollars in cryptocurrency funds from the company’s reserves.

Prosecutors say Mr. Mashinsky publicly claimed that Celsius was making investments “safe and low risk” by only lending to “trustworthy entities with a solid reputation”, but actually did the opposite. The company promised its customers a return on investment of up to 17%. The public prosecutor also accuses the company’s management of knowingly lying about the company’s financial situation, while the latter was in very serious difficulties.

In the state of New York alone, approximately 26,000 Celsius customers lost a total of more than 440 million dollars in the bankruptcy, the prosecutor estimates.

Also read: Article reserved for our subscribers After FTX’s Collapse, Cryptocurrency Enthusiasts Between ‘Disgust’ and ‘Confidence in the Future’

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