New York Sues Crypto Lending Network Celsius and Its Former CEO

The state of New York and its attorney general Leticia James are suing former crypto lending network Celsius for allegedly engaging in fraud and misusing customer funds.

New York Comes Down Hard on Celsius

The sentiment is that FTX wasn’t the only company to use traders’ money for personal gains this year. Celsius really rang a lot of negative bells last summer when it first announced it was going to be halting all withdrawals given that speculation and the volatility of the market had become way too big for its executives to handle. The halts would be put in place indefinitely and customers had no idea regarding when they would be able to get their money back.

Things didn’t quite stop there, however. It was just a few weeks later when the company announced that it was entering bankruptcy proceedings. Celsius said it was going to seek other ways of retaining capital and staying afloat without having to worry about what angry lenders would do to retaliate against it for not making loan payments.

There were all kinds of hoopla around the company as it was announced that Celsius executives were working on a plan to give customers their money back, though now, it looks like that may have just been for show, and when one puts the pieces together for Celsius, they cannot help but be reminded of FTX, which followed the same distinct patterns and pathways.

Think about it. Celsius files for bankruptcy and then the CEO, Alex Mashinsky, resigns from his post. In the case of FTX, the story is the same. The company filed bankruptcy and then the CEO, Sam Bankman-Fried, resigned from his post. It’s now been alleged that FTX used customer funds to purchase luxury items for the company’s executives, so why wouldn’t Celsius’ tale conclude with the same measures?

The similarities are there, and for whatever reason, we couldn’t quite put them together until now. James and her state are taking a stance against Celsius and its top executive, claiming they boasted low-risk investments while repeatedly exposing customers to high risks. This allowed them to make off with user funds and keep the activity hidden from prying eyes.

No More Business for You!

James also says that Mashinksy made false claims about the safety and strategies of the firm. She is now looking to get him barred from doing business within New York’s borders forever. She is also seeking to impose financial penalties and establish a plan that would force him to compensate cheated or affected investors of Celsius.

New York has been coming down hard on crypto companies, a recent example being Coinbase, which was forced to pay more than $100 million to settle with the state’s regulators for allegedly not complying with their anti-money laundering rules.

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