Key points to remember
- New York Attorney General Letitia James today filed a civil lawsuit against former Celsius CEO Alex Mashinsky.
- James claims Mashinsky defrauded investors by misrepresenting company finances.
- She seeks restitution, damages, and prohibits Mashinsky from doing business in New York again.
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Former Celsius CEO Alex Mashinsky is being sued by the New York Attorney General for defrauding investors and making false statements about the company’s finances.
Mashinsky feels the heat
Alex Mashinsky is finally facing the consequences of his mismanagement of Celsius.
New York Attorney General Letitia James filed a civil suit against the former Celsius CEO earlier today. The filing accuses Mashinsky of making false statements to investors about Celsius’ financial condition.
“Alex Mashinsky lied to people about the risks of investing in Celsius, hid his deteriorating financial situation, and failed to register in New York,” said James in a Twitter post. She claimed he had ‘swindled’ hard workers by promising big returns, but only left them in ‘financial ruin’.
James said she was suing Mashinsky for restitution and damages and seeking to bar him again from operating businesses in New York. His office says 26,000 New Yorkers had deposited more than $440 million in degrees Celsius as of December 31, 2021.
Once one of the leading crypto lending companies, Celsius frozen withdrawals of client funds in early June, citing “extreme market conditions”. The company then filed for bankruptcy; the news was met with dismay, outrage and suicide threats from customers, some of whom claimed to have lost all their life savings to the platform.
Court documents later revealed that the company had a $1.19 billion hole in its balance sheet. Celsius insiders claimed the hole was partly due to Mashinsky uses client funds to directionally trade BTC, against the advice of several senior company officials. Mashinsky reportedly lost $50 million in company funds in January 2022 alone.
Months after filing for bankruptcy, Mashinsky suggested renaming Celsius to “Kelvin” and moving forward with the business focusing on crypto custodial services. He resigned shortly after.
Disclaimer: At the time of writing this article, the author of this article owned BTC, ETH, and several other cryptocurrencies.
