Celsius Founder to Face New York Fraud Lawsuit Amid Bankruptcy

Alex Mashinsky, the founder of bankrupt cryptocurrency lender Celsius Network, has been ordered by a Manhattan state court judge to face a civil fraud lawsuit filed by New York Attorney General Letitia James. The lawsuit alleges that Mashinsky defrauded investors by misrepresenting Celsius as a safe alternative to banks while concealing its risks and investment losses. The judge ruled that the attorney general's claims have merit and that some claims can be pursued under the Martin Act, a state securities law. Mashinsky is also facing criminal fraud charges brought by the U.S. Department of Justice and civil lawsuits from the SEC, CFTC, and FTC. Celsius Network, which offered high interest rates and easy loan access, had a $1.19 billion balance sheet deficit when it filed for bankruptcy in July 2022.