Alex Mashinsky, co-founder and former CEO of bankrupt cryptocurrency lending platform Celsius Network, has filed a response to the lawsuit brought against him by New York Attorney General Letitia James. According to the document, the lawsuit has deficiencies in the presentation of the facts of the case and in its legal argumentation and, therefore, should be dismissed.
James claims in his lawsuit on behalf of the people of New York State that Mashinsky defrauded more than 26,000 New York residents of billions of dollars, including by making false statements about the company’s financial condition.
Mashinsky’s response alleges the lawsuit “spreads misinformation,” shows a lack of understanding of Celsius’s business, and gleans statements from Mashinsky’s 180 weekly YouTube appearances. Furthermore, the lawsuit allegedly does not take into account circumstances beyond Mashinsky’s control, namely the cryptocurrency market crash.
While Banks are not your friends @Mashinsky is definitely your enemy
— Pete No Stop (@PeteNoStop) April 24, 2023
The response also criticized the lawsuit’s application of the Martin Act, New York’s strict “blue sky” securities law, and other laws cited in the seven counts of the case. In the answer it is stated:
“Because the Lawsuit does not establish a legally cognizable claim against Mashinsky and is otherwise deficient, it must be dismissed in its entirety.”
James’ lawsuit against Mashinsky was announced on January 5 and amended in March. Notably, at least for Mashinsky’s response, the lawsuit does not name Celsius as a defendant, only Mashinsky.
The creative lawyers defending fraudster Alex @Mashinsky are claiming that #Celsius Earn accounts are not securities the rewards they offered were based upon revenue.
Behold, the seldom used Ponzi defense! pic.twitter.com/f3OXG3elEm
—Cam Crews (@camcrews) May 2, 2023
Celsius filed for bankruptcy on July 13, 2022, after suspending withdrawals a month earlier. Depositors have yet to get their money back, though Celsius struck a deal with decentralized finance market makers Compound, Aave and Maker on the eve of their bankruptcy filing.
An independent court-appointed examiner found many problems with the company’s behavior in a report published in January. Examiner Shoba Pillay said the firm paid $1.36 billion more in rewards than it generated in revenue from customer assets between 2018 and June 30, 2022.
The auction of the Celsius assets is scheduled for May 3, after several delays. Bidders include Gemini and Coinbase.
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