![New York AG Sues Celsius Co-Founder Alex Mashinsky for Alleged Fraud New York AG Sues Celsius Co-Founder Alex Mashinsky for Alleged Fraud](https://kryptocurrency.in/wp-content/uploads/2022/09/Alex_Mashinsky.jpg)
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Alex Mashinsky, the co-founder and former CEO of bankrupt cryptocurrency lender Celsius Network has been sued by New York Attorney General Letitia James for allegedly defrauding investors, including more than 26,000 New Yorkers, out of billions of dollars worth of digital assets.
In an official press release, 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.
Failure to Register as a Salesperson for Celsius
James also stated that the Celsius co-founder failed to register as a salesperson for the lending platform and as a securities and commodities dealer.
According to the AG, these actions taken by Mashinsky before Celsius’ bankruptcy led to investors losing their investments on the platform.
James added that Mashinsky claimed that Celsius made “safe, low-risk investments” and only lent assets to “credible and reputable entities,” while in reality exposing investors’ assets to high-risk counterparties and strategies with many leading to losses, which the former CEO kept from investors.
The AG also mentioned some of the residents who were left in ruins due to Mashinsky’s actions. She said one resident mortgaged two properties to invest with Celsius while a disabled veteran lost $36,000 of his life savings to Celsius.
Lawsuit Seeks Restitution for New York Investors
“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,” Attorney General James said.
The lawsuit seeks to ban Mashinsky from doing business or serving as a director or officer of any entity operating in New York. The complaint also seeks to “secure disgorgement of any proceeds derived from Mashinsky’s unlawful conduct, as well as damages and restitution for investors.”
The lawsuit is part of the AG’s effort to enforce New York laws in the crypto sector. James had previously filed lawsuits against crypto lenders, including Nexo and the now-bankrupt BlockFi.
Meanwhile, an earlier report confirmed that Celsius had won claims over $4.2 billion worth of assets deposited in its Earn accounts.
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