former Celsius boss sued in US


Alex Mashinsky, CEO of Celsius Network, in 2018.

The New York State Attorney announced on Thursday (January 5th) that she opened fraud charges against Alex Mashinsky, founder and former CEO of the cryptocurrency lending company Celsius, which went bankrupt last year. “Alex Mashinsky promised to lead his investors to financial freedom, but he led them to ruin”wrote in a press release Letitia James. “The law is clear that making false promises and lying to investors is illegal. »

Celsius had frozen all customer withdrawals in June 2022, before filing for bankruptcy in July. The company had made some very risky investments just before the cryptocurrency market went into a very steep decline, accumulating a deficit of over $1 billion. Prior to filing for bankruptcy, Mr. Mashinsky and other company executives withdrew millions of dollars in cryptocurrency funds from the company’s reserves.

Prosecutor says Mr. Mashinsky publicly claimed Celsius was making investments “safe and low risk” by lending only to “credible entities with a solid reputation”, but actually did the opposite. The company promised its customers returns on investment of up to 17%. The public prosecutor also accuses the management of the company of having knowingly lied about the financial situation of the company, while the latter was in very serious difficulties.

In New York State alone, approximately 26,000 Celsius customers collectively lost more than $440 million in the bankruptcy, the prosecutor estimates.

Read also: Article reserved for our subscribers After FTX’s Collapse, Cryptocurrency Enthusiasts Between ‘Disgust’ and ‘Confidence in the Future’

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