The New York Attorney General filed a lawsuit against Alex Mashinsky, the former CEO of Celsius, the day after Core Scientific revealed that it was shutting down 37,000 bitcoin miners owned by 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.”
Letitia James, the Attorney General of New York, and the state have been taking action against cryptocurrency businesses for some time. James issued a volatility alert for the cryptocurrency market in June. James also urged Congress to forbid crypto assets from being included in U.S. retirement accounts at the end of November 2022. In a lawsuit that was announced at the end of September 2022, the New York attorney general also targeted the cryptocurrency lender Nexo.
“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.
He added, “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 Mr. Mashinsky defrauded 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.”
Following this week’s bankruptcy ruling that determined the deposits in high-interest earning accounts belong to Celsius, a lawsuit was filed in New York against Mashinsky and his dealings with Celsius. Judge Martin Glenn of a bankruptcy court in New York declared that Celsius, not the users who deposited the digital assets on the long-gone lending platform, is the owner of the rights to the money.