Celsius Co-Founder Files a Response to NY AG Lawsuit

Mashinsky believes that the NY Attorney General’s lawsuit distorts the facts.

Celsius Network’s co-founder and former CEO, Alex Mashinsky, moves to counter the lawsuit by NY Attorney General Letitia James, citing inaccuracies and misinformation.

Mashinsky argues that James’ lawsuit misrepresents facts and displays a poor understanding of Celsius’ operations. In the motion, Celsius co-founder claims that the suit unfairly picks statements from his 180 weekly YouTube appearances and overlooks the impact of the crypto market downturn.

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Furthermore, Mashinsky’s response highlights issues with the lawsuit’s application of the Martin Act and other cited statutes across seven counts, stating:

Because the Complaint fails to state a legally-cognizable claim against Mashinsky and is otherwise deficient, it should be dismissed in its entirety.

New York Attorney General Letitia James accused Mashinsky of defrauding over 26,000 New York residents out of billions of dollars, primarily through false claims about Celsius’ financial situation. Interestingly, the suit only targets Mashinsky, not the company.

At the time of the lawsuit filing, the Attorney General noted:

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.

After halting withdrawals in June 2022, Celsius filed for bankruptcy on July 13th, 2022. Despite settling with DeFi market makers Compound, Aave, and Maker prior to bankruptcy, depositors have yet to recover their funds.

On May 2nd, the news broke that bankrupt crypto lender Celsius is considering merging its United States and United Kingdom entities. However, shortly after Celsius submitted its proposal, the Celsius Official Committee of Unsecured Creditors (UCC) submitted a parallel response noting that the migration of the two entities was a “sham.”

by Gile K. – Expert Reviewer, BitDegree