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Alex Mashinsky, co-founder and former CEO of bankrupt cryptocurrency lending platform Celsius Network, filed a response to New York Attorney General Letitia James’ lawsuit against him. According to the document, the claim is flawed in its presentation of the facts of the case and its legal reasoning and should be dismissed.
James alleged in her lawsuit on behalf of New Yorkers that Mashinsky defrauded more than 26,000 New Yorkers out of billions of dollars, in part by making false statements about the company’s financial position.
Mashinsky’s response claims that the lawsuit is “parrot misinformation”, demonstrates a lack of understanding of the Celsius business, and selects statements from Mashinsky’s 180 weekly YouTube talks. In addition, the lawsuit allegedly did not take into account circumstances beyond the control of Mashinsky, that is, a decline in the cryptocurrency market.
While Banks are not your friends @Mashinsky is definitely your enemy
pic.twitter.com/7xpgyebGuH
— Pete No Stop (@PeteNoStop) April 24, 2023
The response also contained shortcomings in the lawsuit’s application of the Martin Act, New York’s stringent blue sky securities law, and other statutes cited in its seven counts. The answer said:
“Because the complaint does not contain a legally recognized claim against Mashinsky and is otherwise defective, it must be dismissed in its entirety.”
James’ lawsuit against Mashinsky was announced on January 5 and amended in March. Remarkably, at least as far as Mashinsky’s response is concerned, 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 not yet received their money back, although Celsius settled with decentralized finance market participants Compound, Aave and Maker on the eve of filing for bankruptcy.
On the subject: Celsius creditors committee proposes to sue Mashinsky and other Celsius executives
In a report released in January, a court-appointed independent expert found many problems with the company’s behavior. A Shopa Pillay expert said that between 2018 and June 30, 2022, the company paid out $1.36 billion more in rewards than it generated in revenue from customer assets.
The Celsius asset auction is scheduled for May 3 after a series of delays. Bidders reportedly include Gemini and Coinbase.