Former Celsius CEO Faces Fraud Allegation In Federal Court in New York

Key Points:

• The News York Attorney General has sued Former CEO Celsius Mashinsky for alleged cryptocurrency fraud.
• Mashinsky is accused of defrauding hundreds of thousands of investors out of billions of dollars in cryptocurrencies by repeatedly making false and misleading statements about lenders’ safety.
• Mashinsky has denied the criminal charges.

Former Celsius CEO Alex Mashinsky faces a lawsuit filed by New York Attorney General Letitia James, accusing him of fraud, on Friday.

According to Bloomberg, Letitia James, the top cop in New York, filed the lawsuit nearly six months before the former CEO was charged with a federal crime. On Friday, a judge rejected Mashinsky’s attempt to dismiss the case.

James’ lawsuit, filed in January, previews an unsealed indictment last month in Manhattan in which prosecutors claim that between 2018 and June 2022, Mashinsky orchestrated a wide-ranging scheme to mislead Celsius customers about “core aspects” of the company’s business and inflate the value of its proprietary token, CEL. Former director Alex Mashinsky has refused to accept criminal charges.

New York County Supreme Court Justice Margaret Chan said Mashinsky defrauded investors by touting Celsius as a safe alternative to banks and masking its risks, including daily investment losses of hundred million dollars.

“There are reasonable allegations to support a plausible inference that Mashinsky’s meaningful misstatements induced or promoted new investors to deposit assets in Celsius’s earned-interest accounts”

New York County Supreme Court Justice Margaret Chan said in her ruling.

The civil suit seeks to ban Alex Mashinsky from doing business in New York and order him to pay damages for violating laws, including the state’s Martin Act, which gives James broad powers to pursue securities fraud cases.

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