NY Attorney General Sues Former Celsius Network CEO for Defrauding Clients

UTC by Ibukun Ogundare · 3 min read
NY Attorney General Sues Former Celsius Network CEO for Defrauding Clients
Photo: Web Summit / Flickr

New York’s state attorney general Letitia James revealed on Twitter that she is suing the former Celsius Network head for defrauding investors out of billions of dollars.

Who would have thought that the once-upon-a-buzzing crypto industry would have to fight so many legal battles? While former FTX CEO Sam Bankman-Fried is still making headlines amid his court cases, Celsius Network CEO Alex Mashinsky has been sued for defrauding investors. Celsius Network filed for Chapter 11 bankruptcy in July 2022, saying it would help the company stabilize and develop a restructuring plan. After filing for bankruptcy in the US Bankruptcy Court for the Southern District of New York, the CEO boasted of a solid and experienced team to help through the restructuring process.

Before filing for bankruptcy, Celsius halted customer withdrawals in June, citing “extreme market conditions.” The CEO resigned in September, shortly after he reportedly withdrew $10 million from Celsius weeks before the company stopped withdrawals.

NY Attorney General Sues Celsius Network Ex-CEO

New York’s state attorney general Letitia James revealed on Twitter that she is suing the former Celsius Network head for defrauding investors out of billions of dollars. She wrote that the Mashinsky deceived people about the risks associated with investing in the crypto company. In a statement, she explained that he failed to expose the company’s deteriorating financial condition to its clients and also failed to register in New York.

The Attorney General added that the former Celsius Network CEO “tricked hardworking people into investing their life savings into Celsius.” To make the deceit attractive, the executive promised substantial financial returns to the investors and claimed that the platform was more secure than a financial institution. However, these promises and claims went down the drain as Celsuis crashed, and investors were left with losses.

“I’m suing to get New Yorkers their money back and ban Mashinsky from doing business in New York. We will continue to protect people from the risks of investing in cryptocurrency.”

Furthermore, the lawsuit addressed how the Ex CEO was not honest about his claims about the number of Celsius users. In response to the Attorney General’s Twitter thread, American stockbroker Peter Schiff asked what took the lawyer so long. He referenced a YouTube video posted last year about Mashinsky’s scam before the crash.

Schiff is a known Bitcoin critic who believes that Bitcoin will eventually fall. He said in August that Bitcoin was on its way to dropping below $10,000, saying the bull run in the crypto market at the time was not sustainable. He outrightly noted that the market would plunge and advised people who took advantage of the rally to pull out. In his explanation, some people bought BTC years ago and have made enough profits from it. Hence, these investors should get over Bitcoin to avoid tragic stories.

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Ibukun Ogundare

Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.

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