New York Attorney General, Letitia James, filed a lawsuit on Thursday against a former executive of bankrupt cryptocurrency lending platform Celsius.
Alex Mashinsky, the founder and ex-chief executive of the crypto platform, issued “false and misleading statements,” leading to massive losses for investors, she said in her lawsuit.
In a tweet on Friday, she said that “defrauding hardworking New Yorkers is not only shameful, it’s also illegal.”
The fraud issues have cost over 26,000 residents in New York billions in cryptocurrency investments, litigation said. It added the company failed to represent its financial health and follow regulations at the time.
She said in her statement,
“As the former CEO of Celsius, Alex Mashinsky promised to lead investors to financial freedom but led them down a path of financial ruin. The law is clear that making false and unsubstantiated promises and misleading investors is illegal. Today, we are taking action on behalf of thousands of New Yorkers who were defrauded by Mr. Mashinsky to recoup their losses.”
She continued: “Today, we are taking action on behalf of thousands of New Yorkers who were defrauded by Mr. Mashinsky to recoup their losses. My office will stay vigilant and ensure that bad actors trying to take advantage of New York investors are held accountable.”
The news comes after Celsius declared Chapter 11 bankruptcy in July last year, locking scores of customers from their accounts and forcing Mashinsky to resign.
Courts issued a verbal order for Celsius to pay back its clients a total of $44 million USD, reports revealed. The company recently struck a deal with advisors and stakeholders to declare custodial accounts as the property of users and not centralised wallet holders.
