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New York’s attorney general on Thursday filed a civil lawsuit accusing Celsius Network founder Alex Mashinsky of scheming to defraud hundreds of thousands of investors by inducing them to deposit billions of dollars in digital assets with his cryptocurrency company.
The lawsuit filed in a New York state court in Manhattan accuses Mashinsky of violating the state’s Martin Act, which gives Attorney General Letitia James broad power to pursue civil and criminal cases over securities fraud, and other laws.
Mashinsky was accused of promoting Celsius as a safe alternative to banks, while concealing that Celsius was actually engaged in risky investment strategies that contributed to its collapse and bankruptcy.
“Alex Mashinsky promised to lead investors to financial freedom but led them down a path of financial ruin,” James said in a statement. “Making false and unsubstantiated promises and misleading investors is illegal.”
Mashinsky and his lawyer could not immediately be reached for comment.
The lawsuit seeks to ban Mashinsky from doing business in New York, and have him pay damages, restitution and disgorgement.