• New York Attorney General Letitia James has sued Celsius Network co-founder Alex Mashinsky for allegedly defrauding investors out of billions of dollars worth of digital assets.
• The lawsuit seeks disgorgement of any proceeds derived from Mashinsky’s unlawful practices as well as restitution for investors.
• The AG alleged that before Celsius‘ bankruptcy, Mashinsky repeatedly made false and misleading statements about the company’s safety to persuade investors to deposit billions of dollars worth of crypto on the platform.
The New York Attorney General’s Office has filed a lawsuit against Alex Mashinsky, the co-founder and former CEO of Celsius Network, accusing him of defrauding investors out of billions of dollars worth of digital assets. The lawsuit, which was filed by Attorney General Letitia James on Monday, seeks disgorgement of any proceeds derived from Mashinsky’s unlawful practices as well as restitution for investors.
The complaint alleges that Mashinsky and Celsius Network violated the Martin Act, New York’s powerful consumer protection law, by making false and misleading statements about the safety and security of their platform. In particular, the AG alleges that Mashinsky repeatedly misrepresented to investors that their funds were safe, even though the company was on the brink of bankruptcy.
Furthermore, the complaint also alleges that Mashinsky failed to register as a salesperson for Celsius, which is a violation of New York law. The AG is also seeking civil penalties for Mashinsky’s alleged violations.
The complaint alleges that Mashinsky and Celsius misled investors in a number of ways, including by falsely claiming that the platform was “backed by a reserve of billions of dollars in digital assets” and that the company was “backed by the best-known financial institutions and venture capitalists.” The AG also alleges that Mashinsky and Celsius falsely claimed that their platform was “secure” and that investors’ funds were “guaranteed” to be safe.
The complaint also seeks to recover any ill-gotten gains derived from Mashinsky’s alleged misconduct. This includes any profits derived by Mashinsky or Celsius Network from their alleged violations of the Martin Act, as well as any profits derived from Mashinsky’s failure to register as a salesperson for Celsius.
The Attorney General’s lawsuit is the latest in a series of actions taken by New York regulators against companies in the cryptocurrency industry. The AG’s office has previously taken action against cryptocurrency exchanges Bitfinex, Bitstamp, and Kraken, as well as blockchain-based asset manager Coinseed.
Overall, the AG’s lawsuit against Mashinsky and Celsius Network is an important reminder that investors should always do their due diligence when investing in cryptocurrency. Investors should always be sure to research a company’s financial situation, as well as any potential risks associated with the platform. Furthermore, investors should be aware of any potential legal violations, such as failing to register as a salesperson, and take the necessary steps to protect their investments.