Alex Mashinsky, founder of Celsius Network, has filed a motion to dismiss the civil lawsuit against him by New York State Attorney General Letitia James. The complaint accuses Mashinsky of defrauding investors by concealing the deteriorating financial state of the lending platform, leading to the company’s bankruptcy. James’ lawsuit seeks to prevent Mashinsky from operating in New York State and to compensate investors for breaches of securities laws.
Mashinsky’s defense motion argues that the complaint is composed of misinformation and baseless conclusions that lack context. It further claims that the lawsuit demonstrates a fundamental misunderstanding of Celsius’ business and Mashinsky’s role. According to the filing, Celsius’ losses were not solely Mashinsky’s fault, but the result of a liquidity crisis and external factors beyond his control. Mashinsky also denied claims that Celsius offered securities or commodities services.
This latest development comes at a time when bidders, including Coinbase and Gemini, are vying to take over Celsius’ business. The troubled lender has also been accused of poor record-keeping and deficiencies in its internal systems. Celsius has sought to consolidate its UK and US-based entities to improve its financial situation.
In January, James filed the civil lawsuit against Mashinsky, claiming that he promoted Celsius as a safe alternative to banks while charging interest rates of up to 17% on deposits. The lawsuit seeks to hold Mashinsky accountable for violating securities laws, such as the Martin Act, which gives the NYAG broad powers to pursue fraud cases.
Mashinsky’s defense motion is the latest in a series of legal battles faced by Celsius Network. The company has been fighting to stay afloat amidst mounting accusations of fraudulent practices. However, Mashinsky has maintained his innocence and vowed to fight the charges against him.