New York Suit Alleges Celsius Misled Investors

T

he New York Attorney General is taking legal action against Celsius Network Co-founder and ex-CEO Alex Mashinsky, filing a lawsuit that alleges the former chief misled investors in his cryptocurrency business.

The New York attorney general has accused Mashinsky of making false and misleading statements regarding the safety of cryptocurrency lending platform Celsius, concealing its deteriorating financial condition and failing to register as a salesperson or securities/commodities dealers in accordance with Thursday's press release.

A staggering 26,000 New Yorkers were among the hundreds of thousands of investors scammed out billions in cryptocurrency, according to recent reports.

“As the former CEO of Celsius, Alex Mashinsky promised to lead investors to financial freedom but led them down a path of financial ruin, ”In a statement released by New York Attorney General Letitia James, “The law is clear that making false and unsubstantiated promises and misleading investors is illegal.”

On Thursday, attorney Benjamin Allee declared that Mashinsky denies the claims made against him and is enthusiastic to prove his innocence in court. According to a Wall Street Journal report, Allee stated this on behalf of Mashinsky

On July 13, Celsius Network filed for Chapter 11 bankruptcy after having suspended customer accounts a month prior.

The company had propelled itself to the forefront of crypto lending, offering investors with large returns while assuring them that its services were safer than those from conventional banks. Unfortunately, it ran aground by providing enormous profits to depositors while issuing loans secured by inadequate collateral, which made it extremely susceptible to market fluctuations.

According to the New York attorney general's press release, Mashinsky took advantage of his position as the public face of Celsius and misled investors by making false statements while also concealing their losses.

This lawsuit seeks to prevent Mashinsky from participating in securities and commodities business within the state of New York, as well as becoming a director or officer for any company doing business within the state. Moreover, it also requires him to pay damages, restitution and disgorgement according to the official press release.

Jonathan

An editor at Coincrop

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Jonathan is a Coincrop staff writer based in the UK, covering the best rates for cryptocurrency earning and borrowing products. When not at work, he's likely sailing.