New York accuses Celsius creator of cryptocurrency fraud
#York #accuses #Celsius #creator #cryptocurrency #fraud Welcome to Alaska Green Light Blog, here is the new story we have for you today:
Celsius Network founder Alex Mashinsky is being sued by the New York Attorney General for allegedly defrauding investors of billions of dollars in digital currency by concealing the deteriorating state of his now-bankrupt cryptocurrency lending platform.
Mashinsky is accused of violating multiple laws, including New York’s Martin Act, which gives James sweeping powers to investigate securities fraud proceedings, and is being ordered to pay fines and be banned from doing business in New York.
Attorney General Letitia James has filed a lawsuit alleging Mashinsky continued touting Celsius as a safe alternative to banks while hiding hundreds of millions of dollars in losses on risky investments and paying interest rates of up to 17% on deposits.
James explained in a statement that Alex Mashinsky “promised to bring investors to financial independence but led them down a path of financial destruction.” Making false and unsubstantiated claims and deceiving investors is against the law.
Crypto lenders rose to prominence during the COVID-19 outbreak by promising depositors quick access to credit and high interest rates. To capitalize on the discrepancy, they then lent tokens to institutional investors.
Requests for comment were not immediately answered by Mashinsky or his attorney. The lawsuit was filed in Manhattan state court, although Celsius is not named as a defendant.
But in 2022, the business model often failed due to a sell-off in the cryptocurrency markets, leading to the demise of the terraUSD and Luna tokens.
The government’s latest attempt to combat dangerous crypto operations is the case against Mashinsky.
It comes after Sam Bankman-Fried, the founder of cryptocurrency exchange FTX, was indicted in federal court last month on extensive fraud charges. He has pleaded not guilty. According to Yesha Yadav, associate dean at Vanderbilt Law School in Nashville, Tennessee, James’ case “increases the fear factor that is likely to face the sector where money is extremely tight and the ability to absorb significant fines will be much more limited.” will.”
James is allowed to play an “aggressive” enforcement role as there is no clear federal framework to oversee cryptocurrency, Yadav continued. On July 13 last year, Celsius filed for bankruptcy, citing a $1.19 billion imbalance on its balance sheet. Chapter 11 of the US Bankruptcy Code deals with the reorganization of a debtor’s financial affairs, liabilities and assets.
A month earlier, the Hoboken, New Jersey-based company’s 1.7 million customer withdrawals and transfers were frozen due to “extreme” market conditions. According to a court document, Celsius had $9 billion in liabilities at the end of November, including more than $4.3 billion in consumer debt.
James said Mashinsky defrauded more than 26,000 New Yorkers between 2018 and June 2022, when deposits were blocked. Many of the victims were regular investors, she added, including a crippled veteran who lost the $36,000 he had invested for almost a decade and a father of three who lost his $375,000 in life savings.
Mashinsky, who was born in Ukraine and later immigrated to Israel with his family, founded a number of companies before founding Celsius in 2017 and taking on the role of CEO and public face. By early last year, the company had amassed $20 billion in digital assets, according to James, who promoted the company through social media, interviews, and cryptocurrency conferences.
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