Feb 15, 2023
Celsius Creditors Committee Suing Executives for Fraud
The official committee of Celsius creditors is taking legal action against Celsius co-founder Alex Mashinsky and other executives for alleged “fraud, recklessness, gross mismanagement and self-interested conduct” that led to the crypto lender’s collapse.
The proposed complaint was filed in a New York Bankruptcy Court on Feb. 14. It was submitted by attorneys representing the Official Committee of Unsecured Creditors, a group of seven Celsius account holders appointed by the U.S. Trustee in July to represent the interests of Celsius account holders and unsecured creditors.
According to the committee, their investigations into the current and former directors, officers and employees of Celsius have uncovered “significant claims and causes of action based on fraud, recklessness, gross mismanagement, and self-interested conduct.” The proposed lawsuit seeks damages from the following Celsius executives, persons and their associated entities:
Alex Mashinsky, co-founder, director and former CEO
Daniel Leon, co-founder, director and former CSO and chief operating officer
Hanoch “Nuke” Goldstein, co-founder and chief technology officer
Harumi Urata-Thompson, former chief financial officer and chief investment officer
Jeremie Beaudry, former general counsel and chief compliance office
Johannes Treutler, former head of Celsius’ trading desk and person in charge of purchasing CEL tokens on behalf of Celsius
Aliza Landes, the former vice president of Lending of Celsius and spouse of Daniel Leon
Kristine Mashinsky, the spouse of Alex Mashinsky
The committee alleges that the executives breached their fiduciary obligations to Celsius, made “negligent, reckless (and sometimes self-interested) investments”, and directed Celsius to spend “hundreds of millions of dollars” on public markets to inflate the price of CEL tokens. The complaint also alleges that the executives “secretly sold tens of millions of CEL tokens (or were aware of such sales)” for their own benefit.
In addition, the committee claims that the executives “sat idly by as Mr. Mashinsky recklessly bet hundreds of millions of dollars on the movement of the cryptocurrency market”, and “covered up Mr. Mashinsky’s repeated lies about Celsius’ investments and financial condition.”
The motion also alleges that when it became apparent that Celsius would file for bankruptcy, the executives “withdrew assets from the sinking ship” while encouraging customers to keep their assets on the Celsius platform.
The UCC’s goal is to maximize recoveries for the benefit of Celsius’ customers and unsecured creditors who were victims of the negligent, reckless, and fraudulent conduct of Mr. Mashinsky and others.
The hearing on the proposed complaint will be held on March 8.
Celsius’ creditors committee is hoping that the proposed lawsuit will be the first step in recovering assets for victims of the collapse. The committee is also looking into creative ways to promote and market NFTs, such as Twitter-based NFT marketing campaigns. It is also exploring the possibility of launching a web3 agency to help companies sell NFTs and promote their brand.
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