Celsius Network Founder Alex Mashinsky has filed a response seeking to dismiss the complaint filed by New York State Attorney General Letitia James. The complaint, filed in January, accused Mashinsky of defrauding investors out of billions of dollars in crypto by concealing the failing health of his now-bankrupt lending platform. The civil lawsuit aims to prohibit Mashinsky from conducting business in New York state and compel him to compensate damages for violating laws like the state’s Martin Act, which gives NYAG broad power to pursue securities fraud cases.
What’s in Mashinsky’s Response?
In the defense motion, Mashinsky argued that the complaint filed by NYAG is based on misinformation about him and Celsius Network. The civil lawsuit demonstrates a fundamental misunderstanding of the lender’s business and Mashinsky’s role, according to the filing. The response claims that NYAG falsely pinned Celsius’s losses on Mashinsky alone and the company’s fall was a result of a liquidity crisis and circumstances beyond his control.
The response also denied NYAG’s claims of Celsius offering securities or commodities services, accusing the lawsuit of cherry-picking fragments of statements and sound bites without broader context. The latest development comes amidst an auction with bidders vying to take over Celsius’ business, including crypto exchanges Coinbase and Gemini.
The Messy Record-Keeping
The embattled lender was also accused of poor record-keeping and glaring deficiencies in its internal systems. As a result, Celsius sought to consolidate its UK-based entity, Celsius Network Limited (CNL), and its US-based entity, Celsius Network (LLC), in hopes of getting its books in order.
