The New York State Attorney announced on Thursday (January 5th) that she opened fraud charges against Alex Mashinsky, founder and former CEO of cryptocurrency lending company Celsius, which went bankrupt last year. “Alex Mashinsky promised to lead his investors to financial freedom, but he led them to ruin,” wrote Letitia James in a statement. “The law is clear that making false promises and lying to investors is illegal. »

Celsius had frozen all customer withdrawals in June 2022, before filing for bankruptcy in July. The company had made very risky investments just before the cryptocurrency market experienced a very sharp decline, accumulating a deficit of more than a billion dollars. Prior to filing for bankruptcy, Mr. Mashinsky and other company executives withdrew millions of dollars in cryptocurrency funds from the company’s reserves.

According to the prosecutor, Mr. Mashinsky claimed in public that Celsius was making “safe and low-risk” investments by only lending to “credible and reputable entities,” but was actually doing the opposite. The company promised its customers returns on investment of up to 17%. The public prosecutor also accuses the management of the company of having knowingly lied about the financial situation of the company, while the latter was in very serious difficulties.

In New York State alone, approximately 26,000 Celsius customers collectively lost more than $440 million in the bankruptcy, the prosecutor estimates.