• New York’s state attorney general Letitia James has sued the former Celsius Network head, Alex Mashinsky, for defrauding investors out of billions of dollars.
• Celsius Network filed for Chapter 11 bankruptcy in July 2022, after halting customer withdrawals in June.
• Alex Mashinsky reportedly withdrew $10 million from Celsius weeks before the company stopped withdrawals, and resigned in September.
New York’s state attorney general Letitia James recently announced that she is suing the former CEO of Celsius Network, Alex Mashinsky, for defrauding investors out of billions of dollars. According to James, Mashinsky misled investors and made false promises about the company’s financial standing and its ability to return customers’ investments.
Celsius Network, a cryptocurrency trading platform, filed for Chapter 11 bankruptcy in July 2022 in the US Bankruptcy Court for the Southern District of New York. The company cited “extreme market conditions” for the bankruptcy filing, which was meant to help the company stabilize and develop a restructuring plan.
Before filing for bankruptcy, Celsius halted customer withdrawals in June. Shortly after, Mashinsky reportedly withdrew $10 million from Celsius weeks before the company stopped withdrawals. He then resigned in September.
The attorney general is now looking to hold Mashinsky accountable for his actions. According to James, “Investors have the right to know that the companies they’re investing in are legitimate and that the companies’ leaders are acting in their best interests. We’re taking action against Alex Mashinsky for allegedly stealing from investors and misleading them about the success of Celsius Network.”
In response to the lawsuit, Mashinsky has released a statement saying, “I am confident in the legal process and trust that the truth will prevail. I am fully committed to the success of Celsius Network and am confident that the company’s financial health is sound.”
The attorney general’s office is now investigating whether Mashinsky’s actions violated New York state laws. If he is found guilty, he could face significant fines and even prison time. The lawsuit is a reminder of the need for caution when investing in cryptocurrency-related companies, as they are still largely unregulated.