N.Y. sues Celsius Networks crypto CEO Alex Mashinsky for defrauding ‘humiliated’ New Yorkers

The New York attorney general’s office on Thursday filed suit against the ex-CEO of cryptocurrency lending platform Celsius Networks for defrauding hundreds of thousands of investors — including 26,000 New Yorkers — out of billions of dollars.

Attorney General Letitia James’ case against Alex Mashinsky, filed in State Supreme Court in Manhattan, accuses him of financially ruining vulnerable people by promoting lies about Celsius being a safer place to keep money than a bank, its popularity, and its investment strategies.

Among those screwed over was a disabled veteran who lost $36,000 that took him a decade to save up, a father of three who lost $375,000, and another disabled person, who the suit described as feeling “humiliated and defeated.”

In “hundreds of interviews, blog posts, and livestreams,” Mashinsky touted himself “as a modern-day Robin Hood,” the suit claims, falsely assuring regular folk that they could profit big time by investing in Celsius.

Mashinsky once said it delivered high yields “to the people who would never be able to do it themselves.”

“We take it from the rich,” he’s quoted as saying in the lawsuit.

Mashinsky’s promotional work helped the company grow $20 billion in digital assets by early 2022 before it struggled to generate revenue to honor promised yields, according to the suit. That led it to make riskier investments, extend hundreds of millions in uncollateralized loans, and invest in unregulated platforms.

Celsius filed for bankruptcy in June after freezing customer withdrawals and revealing its liabilities outweighed its assets by more than a billion dollars.

James’ suit demands unspecified damages, restitution, disgorgement, and that Mashinsky never does business in New York again.

“[...] Mashinsky promised to lead investors to financial freedom but led them down a path of financial ruin,” James said. “The law is clear that making false and unsubstantiated promises and misleading investors is illegal.”

The case marks the latest legal action against Celsius and one in a string brought against players in the digital currency world.

Amid the colossal collapse of his crypto trading platform, FTX, Sam Bankman-Fried, 30, pleaded not guilty to criminal fraud charges on Tuesday. James’ suit noted Celsius lent roughly a billion dollars to Bankman-Fried’s hedge fund, Alameda Research.

Authorities and advocates have warned people against investing in crypto, with James’ office last year citing its “extreme and unpredictably high price swings.”

The Daily News could not reach Mashinsky’s lawyer.

©2023 New York Daily News. Visit nydailynews.com. Distributed by Tribune Content Agency, LLC.