Celsius Network founder Alex Mashinsky, accused of defrauding hundreds of thousands of investors, has been the subject of a civil suit by the New York Attorney General.
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The former CEO of the bankrupt cryptocurrency lending company “would have acted like a modern-day Robin Hood” but misled investors, the Financial Times reported on Thursday.
The businessman who founded Celsius in 2017 had promoted the company ‘as a safe alternative to banks while concealing that[il] was in fact engaged in risky investment strategies,” it was said during the trial.
“Alex Mashinsky promised to lead investors to financial freedom, but led them down a path to financial ruin,” New York Attorney General Letitia James said in a statement. The law is clear, making false and unsubstantiated promises and misleading investors is illegal.”
Mr Mashinsky, who resigned as chief executive of Celsius last September, said he was “extremely sorry for the difficult financial circumstances that members of our community are facing”.
Last July, “Le Journal de Montréal” reported that a vice-president of the Caisse de depot et placement du Québec (CDPQ) ran a firm in which Celsius boss Alex Mashinsky had invested, but that the Caisse denied any “real or apparent conflict of interest”.
At the time Celsius had regarding 600,000 accounts in its Earn program. These accounts held cryptocurrency with a market value of over $4 billion as of July 10. Celsius declared liabilities exceeding $5 billion in its bankruptcy filing.
If the lawsuit is successful, Mr. Mashinsky might be banned from doing business in New York State and be forced to reimburse investors.
