• New York State Attorney General Letitia James is suing former Celsius Network CEO Alex Mashinsky for defrauding investors out of billions of dollars.
• Celsius Network filed for Chapter 11 bankruptcy in July 2022, and shortly after the CEO resigned in September.
• Before filing for bankruptcy, Celsius had halted customer withdrawals in June, citing “extreme market conditions.”
The cryptocurrency industry has seen its fair share of legal battles. With former FTX CEO Sam Bankman-Fried still making headlines, the latest to join in is former Celsius Network CEO Alex Mashinsky, who has been sued by New York State Attorney General Letitia James for defrauding investors out of billions of dollars.
In July 2022, Celsius Network filed for Chapter 11 bankruptcy in the US Bankruptcy Court for the Southern District of New York. The move was said to help the company stabilize and develop a restructuring plan, with the CEO boasting of a solid and experienced team to help them through the process.
Prior to filing for bankruptcy, customer withdrawals had been halted in June due to “extreme market conditions”. Weeks before the company stopped withdrawals, the CEO had reportedly made a $10 million withdrawal from the company.
The allegations against Mashinsky led to his resignation in September. Now, New York State Attorney General Letitia James has taken action, suing the former CEO for defrauding investors. In her tweet, James said that she was taking Mashinsky to court for allegedly stealing billions of dollars from investors.
The case has set a precedent in the cryptocurrency industry, and has raised questions about the safety of investors. It also serves as a reminder that while the industry may be growing, it is still subject to the same rules and regulations as other industries. It remains to be seen what the outcome of the case will be, but it is a reminder to investors to take extra precaution when investing in new or emerging technologies.