Letitia James, the attorney general of New York, recently filed a lawsuit against Alex Mashinsky, the co-founder and former CEO of Celsius Network LLC, for allegedly defrauding investors. The lawsuit claims that Mashinsky violated the Martin Act and New York’s Executive and General Business Laws by misleading customers into depositing billions of dollars into digital assets within the cryptocurrency lending company. According to James, Mashinsky engaged in a scheme to defraud hundreds of thousands of investors between 2018 and at least June 2022.
Mashinsky allegedly used false and misleading representations to induce customers to deposit billions of dollars in digital assets with Celsius Network LLC. As the “public face” of Celsius, Mashinsky promised investors high yields with minimal risk. However, when Celsius struggled to generate enough revenue to pay the promised yields on investors’ deposits, it allegedly adopted significantly riskier investment strategies. The lawsuit seeks to prevent Mashinsky from engaging in any business related to the issuance, advertisement, or sale of securities or commodities in New York, and also directs him to pay damages, restitution, and disgorgement.
The motion also revealed that New Yorkers had deposited a total of approximately $440 million on the Celsius platform as of December 31, 2021. Mashinsky reportedly informed investors that the Celsius earned interest account (EIA) model was a “sleep to earn” system, where they did not have to do anything and would receive yield payments every Monday. However, the lawsuit alleges that this was misleading and deceptive, as Celsius struggled to meet its financial obligations to investors due to risky investment strategies.
The lawsuit filed by Letitia James against Alex Mashinsky sheds light on the alleged fraudulent activities that took place within Celsius Network LLC. Mashinsky’s misleading representations and promises of high yields with minimal risk are said to have induced hundreds of thousands of investors to deposit billions of dollars into the cryptocurrency lending company. The lawsuit seeks to hold Mashinsky accountable for his actions and prevent him from engaging in similar fraudulent activities in the future.
The motion filed by the attorney general of New York aims to protect investors and ensure that those responsible for fraudulent activities are held accountable. By seeking damages, restitution, and disgorgement from Mashinsky, the lawsuit aims to recover funds for investors who may have been harmed by his alleged fraudulent actions. The lawsuit also serves as a warning to others in the cryptocurrency industry that misleading investors and engaging in fraudulent activities will not be tolerated.
In conclusion, the lawsuit filed by Letitia James against Alex Mashinsky paints a picture of alleged fraud and deception within Celsius Network LLC. Mashinsky’s alleged scheme to defraud investors by making false and misleading representations has led to legal action being taken against him. As the case progresses, it is crucial for investors to be vigilant and cautious when engaging with cryptocurrency platforms to avoid falling victim to similar fraudulent schemes. Letitia James’s lawsuit serves as a reminder that regulatory bodies are actively working to protect investors and hold those responsible for fraudulent activities accountable.
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