Former CEO of Crypto Platform Celsius Sued by AG James for Allegedly Defrauding Investors

Cozen O'Connor
Contact

Cozen O'Connor

  • New York AG Letitia James filed a lawsuit against Alex Mashinsky, a co-founder and former CEO of Celsius Network LLC, for violating the Martin Act and New York’s Executive and General Business Laws by allegedly defrauding investors into depositing billions of dollars in digital assets with the cryptocurrency lending company.
  • According to the complaint, 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, extending hundreds of millions of dollars in uncollateralized loans and investing in unregulated decentralized finance platforms. Mashinsky allegedly failed to disclose Celsius’s losses on these risky investments and actively discouraged investors from withdrawing their assets from the platform, until Celsius eventually filed for bankruptcy and disclosed that its liabilities exceeded its assets by more than a billion dollars.
  • The lawsuit seeks damages, restitution, disgorgement, and a permanent injunction preventing Mashinsky from engaging in any business relating to the issuance, advertisement, or sale of securities or commodities in New York, serving as a director or officer of any company doing business in New York, or engaging in fraudulent, deceptive, and illegal acts in violation of the Martin Act and Executive Law.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

© Cozen O'Connor

Written by:

Cozen O'Connor
Contact
more
less

PUBLISH YOUR CONTENT ON JD SUPRA NOW

  • Increased visibility
  • Actionable analytics
  • Ongoing guidance

Cozen O'Connor on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide