The crackdowns against crypto luminaries are coming hot and heavy: on Thursday morning, New York Attorney General Letitia James filed a civil lawsuit Thursday against Alex Mashinsky, alleging the co-founder of bankrupt crypto lender Celsius Network LLC defrauded investors out of billions of dollars of digital currency.
As first reported by the WSJ, the lawsuit alleges that the former CEO made false statements to investors about the soundness of Celsius’s financial condition then concealed its dire situation when the lender lost hundreds of millions of dollars in risky investments. Mashinsky falsely claimed that Celsius was safer than a bank and only lent assets to credible entities, the lawsuit said.
"Alex Mashinsky lied to people about the risks of investing in Celsius, hid its deteriorating financial condition, and failed to register in New York. Mashinsky tricked hardworking people into investing their life savings into Celsius, promising big financial returns and claiming the platform was safer than a bank" said James, a Democrat. "Instead, Celsius collapsed and New Yorkers were left in financial ruin"
Mashinsky tricked hardworking people into investing their life savings into Celsius, promising big financial returns and claiming the platform was safer than a bank.— NY AG James (@NewYorkStateAG) January 5, 2023
Instead, Celsius collapsed and New Yorkers were left in financial ruin.
“The law is clear that making false and unsubstantiated promises and misleading investors is illegal” she added noting that she is "suing to get New Yorkers their money back and ban Mashinsky from doing business in New York."
The lawsuit accuses Mashinsky of violating the state’s Martin Act, a broad law used to combat securities and commodities fraud, and a state general business law that allows the attorney general to investigate fraud.
Unlike SBF, there are no criminal allegations against Mashinsky, at least not yet.