“Safer than a bank”: Celsius’ Alex Mashinsky sued by NYAG for defrauding over 26,000 New Yorkers

Rick Steves

As an example of Mashinsky’s false and deceptive statements, NY General Letitia James reminded that he repeatedly asserted that Celsius was safer than a bank.

Alex Mashinsky, co-founder and former CEO of cryptocurrency lending platform Celsius Network, has been sued by the New York Attorney General’s Office led by NYAG Letitia James.

The disgraced executive is being charged of defrauding hundreds of thousands of investors, including more than 26,000 New Yorkers, out of billions of dollars worth of cryptocurrency.

NY lawsuit intends to ensure bad actors are held accountable

“As the former CEO of Celsius, Alex Mashinsky promised to lead investors to financial freedom but led them down a path of financial ruin. The law is clear that making false and unsubstantiated promises and misleading investors is illegal. Today, we are taking action on behalf of thousands of New Yorkers who were defrauded by Mr. Mashinsky to recoup their losses. My office will stay vigilant and ensure that bad actors trying to take advantage of New York investors are held accountable”, said Attorney General James.

The complaint alleges that Alex Mashinsky:

  • repeatedly made false and misleading statements about Celsius’s safety to encourage investors to deposit billions of dollars in digital assets onto the platform;
  • misrepresented and concealed Celsius’s deteriorating financial condition;
  • failed to register as a salesperson for Celsius and as a securities and commodities dealer.

For these reasons, the lawsuit seeks to ban Alex Mashinsky from doing business in New York and require him to pay damages, restitution, and disgorgement.

Alex Mashinsky told investors Celsius was safer than a bank

As an example of Mashinsky’s false and deceptive statements, NY General Letitia James reminded that he repeatedly asserted that Celsius was safer than a bank. “However, banks are highly regulated by state and federal government agencies and subject to regular and robust examinations, while Celsius was not subject to such regulatory requirements. Neither Celsius nor its customers had any hope of receiving the same protections as banks”, said the NYAG statement.

New York victims of the Celsius collapse include a resident who mortgaged two properties to invest with Celsius. and a disabled veteran who lost his investment of $36,000, which had taken him nearly a decade to save up. Another disabled citizen, who depended upon government assistance to supplement his $8 per hour income, lost his entire investment, according to the complaint.

Attorney General James has been very active in bringing crypto firms and their executives to justice, having reached a nearly $1 million settlement with crypto platform BlockFi Lending LLC for offering unregistered securities in June 2022.

In October 2021, Attorney General James directed unregistered crypto lending platforms to cease operations for not fulfilling their legal obligations.

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