The New York Attorney General wants to make sure former Celsius CEO Alex Mashinsky never does business in the state ever again.
In a lawsuit announced on Jan. 5, New York Attorney General Letitia James alleged that Mashinsky had defrauded investors out of billions of dollars’ worth of cryptocurrency.
Mashinsky repeatedly made false and misleading statements about his crypto lending platform Celsius’s safety to encourage investors to make deposits, while concealing its deteriorating financial condition, the lawsuit stated.
If her case has a successful outcome, Mashinsky would be banned from doing business in New York and be required to pay damages and restitution to those affected by Celsius’s collapse.
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 James (@NewYorkStateAG) January 5, 2023
Celsius declared bankruptcy in July 2022 after halting all withdrawals, leaving hundreds of thousands of users with assets stuck on the lending platform.
“One New York resident mortgaged two properties to invest with Celsius. A disabled veteran lost his investment of $36,000, which had taken him nearly a decade to save up,” said James.
“Another disabled citizen, who depended upon government assistance to supplement his $8 per hour income, lost his entire investment,” she added.
Impacted users took another blow on Wednesday after Celsius’s bankruptcy Judge Martin Glenn ruled that all cryptocurrency in Celsius Earn accounts were the property of Celsius. Celsius Earn was a popular product which allowed investors to earn interest on cryptocurrency deposited on the platform.
Wednesday’s ruling declared that Celsius users had signed away their ownership over these crypto assets by agreeing to its terms of service. With control over these accounts being officially granted, Celsius is now free to do what it will with $4.2 billion worth of cryptocurrency that came from user deposits.