Former Celsius CEO sued for allegedly defrauding customers Former Celsius CEO sued for allegedly defrauding customers
The New York attorney general has filed a lawsuit against Celsius Network's former CEO Alex Mashinsky for allegedly defrauding investors.
1 min read
Updated: Aug. 11, 2023 at 3:16 am UTC
Web Summit / CC BY 2.0 / Wikimedia. Remixed by CryptoSlate
New York attorney General Letitia James filed a lawsuit against Alex Mashinsky, the co-founder and former CEO of Celsius Network LLC.
James said that Mashinsky violated the Martin Act and New York’s Executive and General Business Laws by allegedly defrauding investors into depositing billions of dollars into digital asset within the cryptocurrency lending company.
“Between 2018 and at least June 2022, Defendant Alex Mashinsky engaged in a scheme to defraud hundreds of thousands of investors.”
Mashinsky allegedly misled customers
James alleged that Mashinsky did so “by using false and misleading representations to induce” customers into depositing “billions of dollars in digital assets” with Celsius Network LLC.
Mashinsky served as the “public face” of Celsius and promised investors high yields with minimal risk. However, when Celsius struggled to generate enough revenue to pay the promised yields on investors’ deposits, it allegedly adopted significantly riskier investment strategies.
Finer details of the motion
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.
This was was the result of Mashinsky informing investors that the Celsius earned interest account (EIA) model as “sleep to earn.”
“You don’t have to do anything, you just go to sleep, and every Monday we pay you yield.”
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Josh O'Sullivan
Josh has been writing for a decade and is passionate about mainstream crypto adoption, bringing positive financial change to the masses through crypto and decentralized finance as a whole.
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In this article
Celsius Network is a P2P decentralized lending & borrowing platform.
Celsius Network
Celsius Network is a bankrupt cryptocurrency lending company that was founded in 2017 and headquartered in Hoboken, New Jersey.
Alex Mashinsky, born in 1965 in the Soviet Union to a Jewish family, moved to Israel in the 1970s.