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NY Sues Celsius Network Founder Over Crypto Fraud

By  |  January 5, 2023

New York’s attorney general on Thursday sued Celsius Network founder Alex Mashinsky, claiming he defrauded investors out of billions of dollars in digital currency by concealing the failing health of his now-bankrupt cryptocurrency lending platform.

Mashinsky fraudulently promoted Celsius as a safe alternative to banks, while concealing that it was losing hundreds of millions of dollars in risky investments, according to a complaint filed by the attorney general, Letitia James.

The civil lawsuit filed in a New York state court in Manhattan seeks to ban Mashinsky from doing business in New York and have him pay damages, restitution and disgorgement.

Related: Why Cryptoassets Are Not Securities

It accuses him of violating the state’s Martin Act, which gives James broad power to pursue securities fraud cases, and other laws.

“Alex Mashinsky promised to lead investors to financial freedom but led them down a path of financial ruin,” James said in a statement. “Making false and unsubstantiated promises and misleading investors is illegal.”