The New York attorney general has sued the former CEO of bankrupt crypto lending company Celsius for defrauding investors.
The company’s former CEO, Alex Mashinsky, will face a fraud case.
Litigation from the New York Attorney General
Attorney General Letitia James’s complaint included the following statements:
“The collapse of Celsius has left many in despair and financial ruin.
Celsius’ business model is unsustainable. When the company realized that it could not generate sufficient income through secured loans and investments, it began to offer unsecured loans to institutional investors and to implement risk strategies in unregulated DeFi protocols.
Alex Mashinsky, the former CEO of Celsius, has pledged to bring investors financial freedom. But it drove them into financial ruin.”
James and his office claimed that Mashinsky deceived investors by stating that the company had $11 billion under management.
The lawsuit prohibits Mashinsky from running any business in the state of New York.
Celsius offered high interest rates to users’ crypto deposits while promoting them in a similar fashion to traditional banks. However, these accounts did not have a specific insurance. The firm entered a deep crisis with the collapse of the Terra ecosystem.