Former Celsius CEO Fights Back Against Fraud Complaints From New York Attorney General
Former Celsius Network founder Alex Mashinsky is asking the courts to dismiss the New York State complaint against him that alleges he defrauded investors out of billions of dollars.
According to a new filing with the New York Supreme Court, Mashinsky argues that the complaint should be tossed out because it relies on misinformation, among other issues.
Says the motion to dismiss,
“The Complaint, which parrots misinformation online about Mashinsky and Celsius Network, LLC (“Celsius”) and borrows others’ baseless conclusions, demonstrates a fundamental misunderstanding of Celsius’s business, and Mashinsky’s role therein.”
New York State Attorney General (NYAG) Letitia James filed the complaint against Mashinsky in January, months after Celsius went bankrupt. She alleges that Mashinsky made misleading statements to investors about key details of his company and failed to properly register as required under state law.
James previously said in a statement,
“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.”
However, the motion to dismiss claims that forces beyond Mashinsky’s control ultimately led to Celsius’ downfall.
“Ultimately, however, circumstances outside of Mashinsky’s (and Celsius’s) control led to a liquidity squeeze that resulted in Celsius pausing withdrawals and filing for bankruptcy. Instead of acknowledging that Celsius’s eventual downfall was caused by a series of calamitous, external events, the NYAG (Attorney General of the State of New York) pins all resulting losses on the alleged misstatements on Mashinsky alone.”
The court filing also claims the complaint “cynically cherry picks fragments of statements and sound bites, without broader context, falsely depicting Celsius’s exceptional transparencies with its users as a deceptive tactic.”
Celsius launched as a cryptocurrency lending platform that promised high yields on investors’ crypto deposits.
James also said in the January statement,
“Mashinsky repeatedly claimed that Celsius made safe, low-risk investments and only lent assets to credible and reputable entities. However, investors’ assets were routinely exposed to high-risk counterparties and strategies, many of which resulted in losses that Mashinsky concealed from investors.”
Celsius filed for bankruptcy in July 2022 when its native asset collapsed by over 99% and it was forced to halt customer withdrawals.
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