Celsius CEO Mashinsky Denies ‘Baseless’ Fraud Claims by New York State

N.Y. Attorney General Letitia James said Mashinsky misled investors about the health of the now-bankrupt crypto lender.

AccessTimeIconMay 3, 2023 at 12:00 p.m. UTC
Updated May 3, 2023 at 5:37 p.m. UTC

Fraud claims against Alex Mashinsky are "baseless" and come from online misinformation, Celsius Network's co-founder and former CEO said in response to a lawsuit brought by New York State.

In a Tuesday filing, Mashinsky’s lawyers responded to claims by New York Attorney General Letitia James that he had misled investors about the now-failed crypto lender’s financial health while he was chief executive.

The complaint “parrots misinformation online about Mashinsky and Celsius Network, LLC … borrows others’ baseless conclusions” and “demonstrates a fundamental misunderstanding of Celsius’s business, and Mashinsky’s role therein,” said the filing, which seeks dismissal of the lawsuit.

The bankruptcy filing, made in July, was due to “calamitous, external events” that were outside the control of Celsius or its CEO, the filing added. It said James “cynically cherry-picks fragments of statements and sound bites” of YouTube videos made to reassure investors.

“The Earn accounts at issue were not securities under well-established law and the Complaint fails to plead adequately the existence of securities or commodities in Celsius’ business model,” the filing said. Mashinsky's filing also disputes James’ claims the company should have been registered with the state as a dealer in financial instruments.

In January, James said Mashinsky used “false and misleading representations” to induce customers to deposit billions of dollars, promising high yields from loans said to be of low risk, via YouTube videos and other promotional material.

Also in January, Shoba Pillay, an independent examiner appointed as part of the bankruptcy proceedings, found the company’s business model “differed significantly” from what it told customers, and that Mashinsky’s claim to always have 200% collateral was “far off the mark.”

Mashinsky resigned as CEO in September and is the subject of legal action to recover funds that Celsius and its creditors say were fraudulently transferred.

Edited by Sheldon Reback.


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Jack Schickler is a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.

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