New York Attorney General Sues Founder of Collapsed Crypto Bank
The New York attorney general, Letitia James on Thursday brought a case against the founder of the defunct crypto-bank Celsius Network, accusing him of being involved in a scheme to fraudulently defraud millions of shareholders.

The suit stems from the company's fall this summer, as the company declared bankruptcy, and its customers lost millions of dollars in deposits. For years, Celsius chief executive, Alex Mashinsky, 57 was a fraud to lure customers into depositing their crypto-based savings on the platform, by promising that it was just as safe like a traditional bank the suit claimed. The lawsuit seeks to stop the business from New York and force him to compensate for any damages.

"When Celsius suffered losses on risky investments, Mashinsky failed to disclose these losses to investors," the lawsuit claimed. "The collapse of Celsius left many individuals in a state of desperation and financial ruin."

A Celsius spokesperson stated in an announcement the statement that said Mashinsky was no longer a part of the company. Mashinsky was no longer associated with the management of the company. The spokesman for Mr. Mashinsky did not respond to a request to comment.

The suit is the most vigorous government reaction to fraudulent practices and risky practices which pushed the crypto sector into crisis in 2022. In the last the month of April, U.S. prosecutors have charged Sam Bankman-Fried who was the co-founder of the failed cryptocurrency exchange FTX and a major fraudster, with numerous charges. Mr. Bankman-Fried is also facing civil charges by The Securities and Exchange Commission and the Commodity Futures Trading Commission.

On Wednesday, the S.E.C. also moved back on plans proposed by the U.S. subsidiary of the huge cryptocurrency exchange Binance to acquire Voyager Digital, a crypto lending company like Celsius that was a failure at the same time.

Prior to the time that FTX announced its it was bankrupt on November 1, the collapse of Celsius was regarded as the most traumatic moment in crypto's catastrophic 2022. For many years the company's founder, Mr. Mashinsky had promoted the company using a too-good-to-be-true advertising promises of interest rates up to 17 percent on crypto deposit.

The industry grew exponentially, and He became one of the most popular and well-known pitchmen. He often appeared in YouTube videos that promoted Celsius as a popular and equalist alternative to traditional banking which he claimed was defrauding customers. In June of last year the company had recorded the equivalent of 179 "ask me anything" videos the majority of which were around an hour long in accordance with the lawsuit.

Mr. Mashinsky's proposal worked. By 2021 Celsius the company, located at New Jersey, managed assets that were worth $20 billion.

The cracks started to appear when the crypto market began to slack in May. As Celsius increased in size as the lawsuit claimed that the company was unable to make enough money to cover the high interest.

"In search of revenue, Celsius moved into significantly riskier investments, extending hundreds of millions of dollars in uncollateralized loans, and investing hundreds of millions of dollars in unregulated decentralized finance platforms," the lawsuit stated.

Some of the loans that Celsius made risky were lent in the direction of Alameda Research, the crypto hedge fund created by the late Mr. Bankman-Fried. Between the years 2022 and 2020 The lawsuit stated that Celsius gave Alameda approximately $1 billion. To secure the loans, Celsius accepted a crypto token that Mr. Bankman-Fried invented known as FTT. The value of FTT fell this year and contributed to the collapse of Alameda and FTX.

At that time, Celsius was already in deep financial trouble. The firm was dissolved in June, and it was declared bankrupt the following month. Following an short attempt for reviving the business however, Mashinsky resigned in September. Mashinsky resigned in September. Customers are in a frenzy to recoup what is left of their savings and are attempting to find attorneys to represent them in an bankruptcy proceeding.
http://www.dream11today.com/new-york-attorney-general-sues-founder-of-collapsed-crypto-bank/

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