- August 5, 2023
- Posted by: admin
- Category: BitCoin, Blockchain, Cryptocurrency, Investments
Alex Mashinsky failed to get the civil lawsuit brought against him by New York Attorney General Letitia James thrown out in court on August 4. A Manhattan state court judge gave the green light for James’ suit to proceed, denying Mashinsky’s motion to dismiss the suit that accuses him of committing civil fraud, Bloomberg reported.
James filed the suit against Mashinsky in January before the founder and former CEO of defunct crypto lender Celsius was hit with federal charges.
New York County Supreme Court Justice Margaret Chan noted in her ruling:
“There are sufficient allegations alleged to support a plausible inference that Mashinsky’s alleged misstatements induced or promoted new investors to deposit assets in Celsius’s earned-interest accounts.”
Allegations of misleading investors with false statements
The suit alleges that Mashinky repeatedly made false and misleading claims about the safety of investments made through Celsius, and concealed the risks involved. The suit claims that he swindled billions worth of crypto from hundreds of thousands of investors.
When Celsius filed for bankruptcy in July 2022, a month after freezing customer withdrawals, it had a hole of $1.19 billion in its balance sheet, per court filings.
The suit also claims that Mashinsky intentionally misled customers about the financial health of Celsius to dupe investors. He allegedly deceived Celsius users about the business’ “core aspects” and fraudulently inflated the value of its native token CEL.
Mashinsky’s lawyers argued on Friday that the alleged misleading statements were “nonactionable puffery” made during “Ask Mashinsky Anything” sessions online. But the judge disagreed.
In her 25-page ruling, Judge Chan said that James’ suit “supports a reasonable inference that the harm suffered by investors flowed, at least in part, from Mashinsky’s alleged misrepresentations made in New York concerning Celsius’ overall financial health and investment safety.”
She added that the allegations against Mashinsky portray an “individual actively misrepresenting the financial condition of his company to keep it afloat.”
The lawsuit brought by New York’s top law enforcement officer aims to blacklist Mashinsky, barring him from doing any state-related business related to securities or commodities issuance, offer, or sale. The suit also aims to bar Mashinsky from serving as director or officer of any New York company.
James said the ruling “should serve as another reminder to crypto companies that we will use the full extent of the law against those who defraud investors,” as a Reuters report.
Maskinsky has denied allegations and pleaded not guilty to the separate federal criminal charges.
The post Former Celsius CEO Alex Mashinsky loses motion to dismiss civil fraud lawsuit appeared first on CryptoSlate.
