New York's attorney general on Thursday sued Celsius Network founder Alex Mashinsky, claiming he defrauded investors out of billions of dollars in digital currency by concealing the failing health of his now-bankrupt cryptocurrency lending platform.
Mashinsky persisted in promoting Celsius as a safe alternative to banks, paying interest as high as 17% on deposits, while concealing hundreds of millions of dollars of losses in risky investments, according to a complaint filed by the attorney general, Letitia James.
Neither Mashinsky nor his lawyer immediately responded to requests for comment. Celsius is not a defendant in the lawsuit, filed in a state court in Manhattan. James' lawsuit "adds to the fear factor likely facing the industry, where money is extremely tight and the capacity to absorb large fines is going to be much more limited," said Yesha Yadav, associate dean at Vanderbilt Law School in Nashville, Tennessee.
Celsius ended November with $9 billion of liabilities, including more than $4.3 billion owed to customers, a court filing shows. Born in Ukraine and later emigrating to Israel with his family, Mashinsky started multiple businesses before founding Celsius in 2017, becoming its chief executive and public face.
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