New York Attorney General Letitia James filed a lawsuit against the founder in January, possibly using the Martin Act, a robust state securities statute, to pursue specific claims.
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New York Attorney General Letitia James can move forward with her civil fraud lawsuit against Alex Mashinsky, the founder and former CEO of the now-defunct crypto lender Celsius Network, according to a judge’s decision in Manhattan state court on Friday.
The lawsuit was filed by James in January before Mashinsky faced federal charges. Justice Margaret Chan ruled that the allegations were sufficient, suggesting that Mashinsky committed fraud by misrepresenting Celsius as a safe banking option while concealing its risks, resulting in losses of hundreds of millions of dollars.
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According to Justice Chan, the “earned interest accounts” offered by Celsius to its clients were considered securities under state law. As a result, New York Attorney General Letitia James may pursue specific claims using the Martin Act, a robust state securities statute.
The judge’s 25-page decision stated that the attorney general’s lawsuit indicates a reasonable inference that the harm experienced by investors resulted, at least in part, from Mashinsky’s alleged misrepresentations made in New York about Celsius‘ financial well-being and investment safety.
Mashinsky has denied any wrongdoing related to criminal fraud charges brought against him by the United States Department of Justice. Additionally, the United States Federal Trade Commission (FTC), the United States Commodity Futures Trading Commission (CFTC), and the United States Securities and Exchange Commission (SEC) have filed separate but related civil actions against him.
During the COVID-19 epidemic, crypto lending platforms like Celsius experienced substantial growth due to the increasing value of digital assets. These firms aimed to make profits by offering depositors quick access to loans at high-interest rates while lending tokens to institutional investors.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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