Former CEO and co-founder of Celsius Network, Alex Mashinsky, faces a lawsuit for defrauding hundreds of thousands of investors, including 26,000 New Yorkers.
NY AG Letitia James isn’t just seeking damages for victims, she’s also determined to permanently bar Mashinsky from trading and operating a business in New York.
James will be taking Mashinsky to court over defrauding thousands. Source: Pixabay.com
Celsius Network operated as a global cryptocurrency lending firm. The New Jersey-based company offered buying, borrowing, swapping and earning crypto. Clients were promised an uncomplicated means of attaining financial security and freedom. The possibility of taking out loans by pledging cryptocurrency as security enticed many Americans, especially following the Covid-19 pandemic.
As of May 2022, Celsius had lent out $8 billion to users, while holding $12 billion in assets under management. Only a month later, the company abruptly froze all account activity, citing steep declines in prices on the cryptocurrency market. Another month later, on July 13, Celsius filed for Chapter 11 bankruptcy. Now, judge Martin Glenn is ruling out that under the terms of the company’s lengthy contracts, clients’ cryptocurrency assets became Celsius’s property.
Shady legal documents coupled well with deceptive promises and false information regarding the number of users Celsius had. Clients acquired and pacified, Mashinksy went on to expose their investments to high-risk third parties and strategies.
“Mashinsky tricked hardworking people into investing their life savings into Celsius, promising big financial returns and claiming the platform was safer than a bank.
Instead, Celsius collapsed and New Yorkers were left in financial ruin..” — NY AG Letitia James, via Twitter.
The case of Celsius, as well as the collapse of once-leading cryptocurrency exchange FTX in November 2022, points many to an obvious conclusion — crypto is a future to be embraced in a way first and foremost informed. The point of decentralized finance is to eliminate third parties and maintain authority over your own money. By trusting lending firms which promise unrealistic yields, investors remain blindly reliant on third parties. By understanding the capabilities of blockchains and DeFi, users can hold and stake securely, all on their blockchain of choice. Ethereum offers a comprehensive guide to solo staking. “Ponzi Schemes” like Celsius Network are only able to target those lacking in knowledge.
