Former Celsius Network founder Alex Mashinsky is asking the court to dismiss New York State’s charges against him alleging he defrauded investors out of billions of dollars.
According to a new filing with the New York Supreme Court, Mashinsky argues that the complaint should be dismissed, including because it is based on misinformation.
Says the motion to dismiss,
“The complaint, which mimics misinformation online about Mashinsky and Celsius Network, LLC (“Celsius”) and draws on the baseless conclusions of others, demonstrates a fundamental misunderstanding of Celsius’s activities and Mashinsky’s role therein.”
New York State Attorney General (NYAG) Letitia James filed the complaint against Mashinsky in January, months after Celsius filed for bankruptcy. She alleges that Mashinsky made misleading statements to investors about important details of his company and failed to properly register as required by state law.
James previously said in a statement:
“As a former CEO of Celsius, 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.”
The motion to dismiss claims that forces beyond Mashinsky’s control ultimately led to Celsius’ downfall.
“Ultimately, however, circumstances beyond Mashinsky’s (and Celsius’) control led to a liquidity crunch that led to Celsius halting withdrawals and filing for bankruptcy. Rather than acknowledging that Celsius’ eventual demise was caused by a series of cataclysmic, external events, the NYAG (New York State Attorney General) attributes all ensuing losses solely to the alleged misrepresentations.”
The court filing also alleges that the complaint “cynically plucks snippets of statements and sound bites, without broader context, falsely portraying Celsius’s exceptional transparency with its users as a deceptive tactic.”
Celsius launched as a cryptocurrency lending platform that promised high returns on investors’ crypto deposits.
James also said in the January statement:
“Mashinsky repeatedly claimed that Celsius made safe, low-risk investments and only lent assets to credible and reputable entities. However, investors’ assets were routinely exposed to risky counterparties and strategies, many of which resulted in losses that Mashinsky concealed from investors.”
Celsius filed for bankruptcy in July 2022 when its own assets collapsed by more than 99% and it was forced to halt customer withdrawals.
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