NY AG Sues Celsius Network Co-Founder for Defrauding Investors

• The New York Attorney General has filed a lawsuit against Alex Mashinsky, the co-founder and former CEO of Celsius Network LLC, for allegedly defrauding investors.
• Mashinsky is accused of violating the Martin Act and New York’s Executive and General Business Laws by allegedly misleading customers into depositing billions of dollars into digital asset within the cryptocurrency lending company.
• The motion seeks to prevent Mashinsky from „engaging in any business relating to the issuance, advertisement, or sale of securities or commodities in New York,“ as well as „directing Mashinsky to pay damages, restitution, and disgorgement.“

The New York Attorney General has filed a lawsuit against Alex Mashinsky, the co-founder and former CEO of Celsius Network LLC, for allegedly defrauding investors. The motion, which was filed by Attorney General Letitia James, accuses Mashinsky of violating the Martin Act and New York’s Executive and General Business Laws by allegedly misleading customers into depositing billions of dollars into digital asset within the cryptocurrency lending company.

Mashinsky, who served as the „public face“ of Celsius, promised investors high yields with minimal risk. However, when Celsius struggled to generate enough revenue to pay the promised yields on investors‘ deposits, it allegedly adopted significantly riskier investment strategies. According to the motion, these strategies included investing in “lower-quality and higher-risk assets,” as well as “engaging in proprietary trading and other activities that exposed investors to greater risk than what was promised.”

The motion seeks to prevent Mashinsky from „engaging in any business relating to the issuance, advertisement, or sale of securities or commodities in New York,“ as well as „directing Mashinsky to pay damages, restitution, and disgorgement.“ It further states that “New Yorkers who invested their hard-earned money in the Celsius Network were victimized by a scheme that was intended to enrich the defendants and other individuals involved in the scheme,” and that Mashinsky and his cohorts “will be held accountable for their fraud and their deceptive practices.”

In a statement, Attorney General James said, “The Celsius Network and its former CEO allegedly engaged in a brazen scheme to defraud investors, and today’s action seeks to make them pay for their misconduct. We will continue to crack down on those who seek to take advantage of New Yorkers in pursuit of their own financial gain.”

The lawsuit, which is ongoing, is being handled by the Office of the Attorney General’s Investor Protection Bureau. The bureau is responsible for protecting investors and preventing financial fraud, and has received numerous awards for its work.

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