The day after Judge Martin Glenn ruled that Celsius owned the $4.2 billion deposited in Earn accounts, the New York Attorney General sued Alex Mashinsky, who founded and led the crypto lending platform since 2017, for defrauding investors and failing to disclose the financial difficulties the company was facing.
I'm suing the former CEO of cryptocurrency platform @CelsiusNetwork for defrauding investors out of billions of dollars.
Alex Mashinsky lied to people about the risks of investing in Celsius, hid its deteriorating financial condition, and failed to register in New York.
— NY AG James (@NewYorkStateAG) January 5, 2023
The platform promised high returns, higher than most of the crypto industry, and they had to make risky investments in order to try to follow up on this pledge.
The Ukrainian national resigned from his CEO position on Sept. 27, more than two months after Celsius filed for bankruptcy. The crypto lender paused withdrawals in June, following the ruckus caused by the collapse of the Terra ecosystem, despite saying two days before that “Celsius has billions in liquidity”. The filing also specified that it owed $4.7 billion, to about 1.7 million customers.
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