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Ex-Celsius Chief Executive Alex Mashinsky Submits Defense Motion Against New York Attorney General’s Allegations
Alex Mashinsky, the founder of Celsius Network, who has been accused of defrauding investors out of billions in cryptocurrency by hiding the deteriorating condition of his now-insolvent lending platform, has submitted a response aiming to dismiss the complaint filed against him by the State of New York.
The complaint was lodged by New York State Attorney General Letitia James in January. It alleged that Mashinsky continued to market Celsius as a reliable alternative to traditional banks, while users were required to pay interest rates as high as 17% on their deposits.
The civil lawsuit seeks to prevent Mashinsky from conducting business within New York State and to mandate that he pay damages for breaching laws, including the Martin Act, which grants the NYAG extensive authority to pursue cases of securities fraud.
Mashinsky’s Defense
In a recently submitted defense motion, the 57-year-old Mashinsky contended that the NYAG’s complaint “repeats misinformation” regarding him and Celsius Network and “adopts unfounded conclusions from others.” The former executive further asserted that the civil lawsuit against him “reflects a fundamental misunderstanding” of the lender’s operations, as well as his involvement.
The filing accused the NYAG of incorrectly attributing Celsius’ losses solely to alleged misstatements made by Mashinsky. It argued that the company’s decline was due to a liquidity crisis and factors beyond the control of both the executive and Celsius.
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The response also claimed that James’s lawsuit involved “cherry-picking” excerpts of statements and sound bites without providing the necessary broader context and denied allegations of Celsius offering services related to securities or commodities.
Poor Record-Keeping
This latest development occurs amid an auction where bidders are competing to acquire Celsius’ business. Major cryptocurrency exchanges Coinbase and Gemini have entered the bidding process.
The troubled lender has also faced accusations of inadequate record-keeping and significant flaws in its internal systems. Consequently, Celsius aimed to merge its UK-based entity, Celsius Network Limited (CNL), with its US-based entity, Celsius Network (LLC), in an effort to organize its financial records.
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