New York Attorney General Sues Celsius Co-Founder Alex Mashinsky for Crypto Fraud

On Jan. 5, 2023, the state of New York and attorney general Letitia James filed a lawsuit against Alex Mashinsky, the co-founder and former CEO of Celsius. The lawsuit claims that Mashinsky and Celsius defrauded “hundreds of thousands of investors, including more than 26,000 New Yorkers, out of billions of dollars worth of cryptocurrency.”

The day after Core Scientific detailed that it was shutting down 37,000 bitcoin miners owned by Celsius, New York’s Attorney General filed a lawsuit against Alex Mashinsky, the former CEO of Celsius. The lawsuit alleges that Mashinsky “repeatedly made false and misleading statements about Celsius’s safety” and that he encouraged investors to “deposit billions of dollars in digital assets onto the platform.” According to the lawsuit, 26,000 New Yorkers are affected by the Celsius demise and James wants to ban Mashinsky from doing business in New York.

The lawsuit states:

Mashinsky promoted Celsius as a safe alternative to banks while concealing that Celsius was actually engaged in risky investment strategies.

The state of New York and attorney general Letitia James have been cracking down on crypto businesses for some time. In June, James warned about the crypto industry’s volatility. At the end of Nov. 2022, James also urged Congress to ban crypto assets from U.S. retirement accounts. In addition, the New York attorney general targeted the crypto lender Nexo in a lawsuit announced at the end of Sept. 2022.

“As the former CEO of Celsius, Alex Mashinsky promised to lead investors to financial freedom but led them down a path of financial ruin,” said attorney general James. “The law is clear that making false and unsubstantiated promises and misleading investors is illegal. Today, we are taking action on behalf of thousands of New Yorkers who were defrauded by Mr. Mashinsky to recoup their losses. My office will stay vigilant and ensure that bad actors trying to take advantage of New York investors are held accountable.”

The New York-based lawsuit against Mashinsky and his Celsius dealings follows the bankruptcy ruling this week that ruled the deposits in high-interest-earning accounts belong to Celsius. Judge Martin Glenn, of a New York-based bankruptcy court, said Celsius owns the rights to the funds rather than the customers who deposited the digital assets on the now-defunct lending platform.

What do you think about the New York attorney general’s lawsuit against Celsius CEO Alex Mashinsky? Let us know what you think about this subject in the comments section below.