New York Attorney General Letitia James has filed a lawsuit against Alex Mashinsky, co-founder and former CEO of Celsius Network LLC.
James said Mashinsky violated the Martin Act and New York’s general and executive business laws by allegedly defrauding investors into depositing billions of dollars worth of digital assets within the cryptocurrency lending company.
“Between 2018 and at least June 2022, defendant Alex Mashinsky engaged in a scheme to defraud hundreds of thousands of investors.”
Mashinsky allegedly misled customers
James alleged that Mashinsky did so “using false and misleading representations to induce” clients to deposit “billions of dollars in digital assets” with Celsius Network LLC.
Mashinsky acted as the “public face” of Celsius, promising investors high returns with minimal risk. However, when Celsius struggled to generate enough income to pay the promised returns on investor deposits, he allegedly adopted significantly riskier investment strategies.
Finer details of the movement.
Heseeks to prevent Mashinsky from “engaging in any business related to the issuance, advertising, or sale of securities or commodities in New York,” as well as “ordering Mashinsky to pay damages, restitution, and return.”
The motion also stated that “New Yorkers have deposited a total of approximately $440 million into the Celsius platform” as of December 31, 2021.
This was the result of Mashinsky telling investors that the Celsius Earned Interest Account (EIA) model was “sleep to win.”
“You don’t have to do anything, you just go to sleep, and every Monday we pay you the performance.”