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 <p class="is-style-lead">Alex Mashinsky, the founder and former CEO of Celsius Network, a centralized crypto lender that folded in 2022, has been directed by a Manhattan state court judge to&nbsp;<a rel="noopener noreferrer nofollow" title="respond" href="https://thebittimes.com/tag/respond.html">respond</a>&nbsp;to a <a rel="noopener noreferrer nofollow" title="lawsuit" href="https://thebittimes.com/tag/lawsuit.html">lawsuit</a> initiated by New York Attorney General Letitia James. </p> 
 <p>The <a rel="noopener noreferrer nofollow" title="lawsuit" href="https://thebittimes.com/tag/lawsuit.html">lawsuit</a> alleges civil fraud, claiming that Mashinsky misled investors by portraying Celsius Network as a safe banking alternative while withholding its risks and significant investment losses.</p> 
 <p>Judge Margaret Chan, overseeing the case, found evidence suggesting a link between Mashinsky’s actions and the financial losses suffered by investors.&nbsp;</p> 
 <p>James contends that Mashinsky misrepresented Celsius Network’s financial stability and investment safety and harmed investors.&nbsp;</p> 
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 <p>Specifically, the <a rel="noopener noreferrer nofollow" title="lawsuit" href="https://thebittimes.com/tag/lawsuit.html">lawsuit</a> asserts that Mashinsky’s false claims about the lender’s financial health and investment security played a role in the financial losses faced by investors.</p> 
 <p>The judge’s ruling also allows specific claims under the Martin Act, a potent state securities law, to proceed. Additionally, the ruling classifies Celsius Network’s “earned interest accounts” as meeting the legal definition of securities under state law.</p> 
 <p>Mashinsky is facing criminal fraud charges and civil <a rel="noopener noreferrer nofollow" title="lawsuit" href="https://thebittimes.com/tag/lawsuit.html">lawsuit</a>s from multiple U.S. regulatory bodies, including the Securities and Exchange Commission (SEC), following the collapse of Celsius Network.</p> 
 <p>Celsius Network capitalized on the heightened interest in crypto during the last bullish cycle, rapidly gaining popularity.&nbsp;</p> 
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 <p>By offering enticing interest rates and streamlined loan access on top cryptocurrencies, including Bitcoin and stablecoins, it aimed to serve as a modern banking alternative. </p> 
 <p>However, the company grappled with regulatory scrutiny and financial challenges after crypto prices began dropping from last 2021. By the end of 2022, Bitcoin, for example, had fallen below $16,000.</p> 
 <p>In July 2022, Celsius Network sought Chapter 11 bankruptcy protection, revealing a substantial $1.19 billion deficit. The decision to file for bankruptcy came after a suspension of customer withdrawals and transfers, attributed to what the company described as “extreme” market conditions.</p> 
 <p>The <a rel="noopener noreferrer nofollow" title="lawsuit" href="https://thebittimes.com/tag/lawsuit.html">lawsuit</a> against Mashinsky and Celsius Network points to the ongoing regulatory complexities in crypto, especially in the United States.&nbsp;</p> 
 <p>The New York Office of the Attorney General (NYOAG) has been actively pursuing crypto firms they are convinced are violating the state’s security laws.&nbsp;</p> 
 <p>KuCoin was sued in March, and this week it emerged that Genesis Global Capital, a subsidiary of the Digital Currency Group (DCG), was being investigated by the NYOAG.&nbsp;</p> 
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Ex-Celsius CEO must respond to NY lawsuit

TheBitTimes

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