• New York’s state attorney general Letitia James is suing the former Celsius Network head for allegedly defrauding investors out of billions of dollars.
• Celsius Network filed for Chapter 11 bankruptcy in July 2022 and halted customer withdrawals in June due to “extreme market conditions.”
• The CEO resigned in September after reportedly withdrawing $10 million from the company weeks before the withdrawal halt.

The New York State Attorney General Letitia James has recently filed a lawsuit against the former head of the Celsius Network, Alex Mashinsky, for allegedly defrauding investors out of billions of dollars. The news of the lawsuit comes after the Celsius Network filed for Chapter 11 bankruptcy in July 2022 and halted customer withdrawals in June due to “extreme market conditions.”

The lawsuit states that Mashinsky, who resigned from the company in September, allegedly withdrew $10 million from Celsius weeks before the company stopped allowing customer withdrawals. Furthermore, the lawsuit claims that the company was conducting a debt issuance scheme that defrauded investors out of billions of dollars by promising high-yield returns, when in reality the company was unable to meet those returns.

The Attorney General has accused Mashinsky of deceiving investors about Celsius’ financial stability, as well as misrepresenting the company’s management, operations, and products. The lawsuit also claims that Mashinsky was using the company’s funds to pay for personal expenses, such as luxury vacations and luxury cars.

In response to the lawsuit, Mashinsky has stated that he is “confident that the facts will show that I acted in the best interests of the company and its customers.” He has also stated that he “refute[s] any allegations of wrongdoing” and that he “intend[s] to vigorously defend [himself] in court.”

The New York State Attorney General Letitia James is taking a hard stance against the alleged fraud by Mashinsky, and the case is expected to serve as an example for other companies and executives who may be tempted to commit similar fraudulent activities. If found guilty, Mashinsky could face jail time and hefty fines, in addition to potential legal and financial repercussions for the company. This case will be closely watched by the crypto industry, as it could have long-lasting implications for the entire industry.