New York Attorney General Sues This Altcoin CEO! –

The New York attorney general has sued Alex Mashinsky, the former CEO of the altcoin company, for allegedly defrauding investors.

Altcoin CEO’s claim to mislead customers

New York Attorney General Letitia James has sued Alex Mashinsky, co-founder and former CEO of altcoin platform Celsius Network LLC. James said Mashinsky violated Martin’s Law and New York’s Enforcement and General Trade Laws for allegedly defrauding investors into investing billions of dollars in the digital asset within the cryptocurrency lending company.

James claimed Mashinsky did this by using false and misleading statements to “encourage customers” to deposit “billions of dollars in digital assets” with Celsius Network LLC.

Mashinsky served as the ‘public face’ of Celsius, promising investors high returns with minimal risk. However, Celsius has allegedly adopted significantly riskier investment strategies, while trying to generate enough income to pay off the promised returns on investors’ deposits.

The finer details of the movement

The motion aims to prevent Mashinsky from ‘engaging in any business related to the issuance, advertising or sale of securities or commodities in New York’ and ‘directing Mashinsky to pay damages, compensation and liquidation’.

The resolution also stated that as of December 31, 2021, “New Yorkers have invested a total of approximately $440 million in the Celsius platform.” This was the result of Mashinsky informing investors that Celsius’s earned interest account (EIA) model was ‘sleeping to earning’. However, Mashinsky said in a statement he made:

“You don’t have to do anything, you just sleep and we pay you every Monday.”

Celsius will also sell more mining rigs

According to the filing submitted to the court on January 11, Celsius Mining signed a sales agreement on January 7 to sell 2,687 Bitcoin mining rigs to Touzi Capital for $1.34 million. The mining rigs are the “MicroBT ASIC M30S” located in Houston, Texas, with a hash rate ranging from 84TH/s to 92TH/s.

Celsius Mining said it had spoken to several brokers and market participants and decided that Touzi Capital’s offer was the best. The mining company said that the proceeds from the sale of the equipment will be used for general and corporate expenses. Meanwhile, sales are still subject to the De Minimis asset sell order. As we mentioned, Bitcoin (BTC) miner Core Scientific received a court approval on January 4 to shut down Celsius Mining’s 37,000 mining machines.

The creditor objects to the sale

Meanwhile, Celsius creditor Víctor Ubierna de las Heras objected to the sale of mining rigs on the grounds that the debtors did not specify how they would use the proceeds from the sale. De las Heras added that for the sale to continue, the intended use of the proceeds must be clearly defined.

New York Attorney General Sues This Altcoin CEO!
FILE PHOTO: Celsius logo and representation of cryptocurrencies are seen in this illustration taken, July 7, 2022. REUTERS/Dado Ruvic/Illustration

It also questioned whether the sale would be in the best interest of the property, given that the borrower had previously said Celsius Mining was positive in terms of cash flow and generating revenue. The creditor underlined that Celsius is willing to sell its mining machinery at a 73% discount, which is inconsistent with the fair market value of the assets.

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