Feb 15, 2023

UCC to Sue Celsius Execs for Fraud, Mismanagement

The Official Committee of Unsecured Creditors of Celsius is taking legal action against the crypto lender’s co-founder, Alex Mashinsky, and other executives for their alleged involvement in the collapse of the company.

In a complaint filed in a New York Bankruptcy Court on Feb. 14, the committee, which comprises seven Celsius account holders appointed by the U.S. Trustee in July, is accusing the executives of fraud, recklessness, gross mismanagement, and self-interested conduct.

The complaint seeks damages from the following Celsius personnel 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 defendants breached their fiduciary duties to Celsius and made negligent, reckless, and self-interested investments, resulting in the company losing $1 billion in a single year. The lawyers also allege that the executives directed Celsius to spend “hundreds of millions of dollars” on public markets to inflate the price of CEL tokens while they “secretly sold tens of millions of CEL tokens (or were aware of such sales)” for their own benefit.

The UCC is also accusing the executives of withdrawing assets from the company while actively encouraging customers to keep their assets on the Celsius platform.

The hearing on the proposed complaint will be held on March 8.

The official creditors committee is hoping to maximize recoveries for the benefit of Celsius’ customers and unsecured creditors who were affected by the alleged negligent, reckless, and fraudulent conduct of Mr. Mashinsky and others.

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