New York’s attorney general is suing ex-Celsius boss Alex Mashinsky for defrauding investors.

In a Thursday statement, New York Attorney General Letitia James alleged that Mashinsky “promised to lead investors to financial freedom but led them down a path of financial ruin.”

Celsius was a popular crypto lending platform that allowed users to deposit cash and earn returns on their digital assets.


But it went bust last year: in June, it stopped withdrawals, citing “extreme market conditions,” and a month later, it filed for bankruptcy.

Today’s lawsuit claims Mashinksy defrauded hundreds of thousands of investors out of billions of dollars worth of cryptocurrency.

“Today, we are taking action on behalf of thousands of New Yorkers who were defrauded by Mr. Mashinsky to recoup their losses,” the statement added.

The lawsuit alleges that Mashinksy lied to customers and hid the true extent of Celsius’s financial troubles. This encouraged clients to continue depositing money into the platform, James claims. 


“As Celsius lost hundreds of millions of dollars of assets in risky investments, Mashinsky misrepresented and concealed Celsius’s deteriorating financial condition,” the statement said. 

The lawsuit alleges that a number of investors were seriously hurt because of Mashinksy’s actions. One man, a disabled veteran who spent nearly a decade saving, lost his investment of $36,000, the lawsuit claimed. 

James wants to permanently bar Mashinsky from engaging in any business relating to the issuance, offer, or sale of securities or commodities in New York, and stop him from serving as a director or officer of any company doing business in the state. 

She also wants disgorgement of any proceeds derived from Mashinsky’s allegedly unlawful conduct—and get damages and restitution for investors.

Celsius is one of many crypto companies that was hit hard by the collapse of blockchain project Terra last year, the fall of crypto hedge fund Three Arrows Capital, and the subsequent drop in digital asset prices. 

Terra was a very popular project but its stablecoin—which ran on automated code—stopped working and billions of dollars of investors’ cash went up in smoke. 

When it crumbled, Bitcoin’s price tanked—taking every other coin and token with it—which led digital asset lenders and exchanges to take a beating. 


Many have since gone bankrupt or are facing lawsuits. By far the most high-profile crypto company to go bust has been FTX, an exchange which was so criminally mismanaged, customers lost billions of dollars in a matter of days, prosecutors allege. 

U.S. prosecutors hit FTX’s ex-CEO Sam Bankman-Fried with eight criminal charges last month. This week, he pleaded not guilty before a federal New York court.

Editor's note: This article was updated after publication to include additional details regarding Celsius's financial troubles and the NYAG's lawsuit.

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