• Celsius Network and its creditors have launched court action to recover millions of dollars they claim were fraudulently transferred from founder Alex Mashinsky and other former executives.
• The 150-page legal document alleges that Mashinsky, co-founder S. Daniel Leon and others mismanaged the crypto lender, inflated the price of CEL tokens for their own benefit and made “negligent, reckless and sometimes self-interested investments” in the run-up to bankruptcy.
• The filing requests recovery, costs and punitive damages based on 33 counts, including the transfer of billions to decentralized finance platform KeyFi to engage in speculative investment.
Celsius Seeks to Recover Millions From Former Executives
Celsius Network and its creditors have begun court action to recover millions they say was fraudulently transferred from founder and former CEO Alex Mashinsky, his wife and other former senior executives. Court documents published on Tuesday allege Mashinsky, co-founder S. Daniel Leon and others mismanaged the crypto lender, inflated the price of CEL tokens for their own benefit, and made „negligent, reckless and sometimes self-interested investments“ in the run-up to bankruptcy in July.
Specifics Of Filing
The 150-page legal document they filed requests recovery, costs and punitive damages based on 33 counts. They include the transfer of billions to decentralized finance platform KeyFi, which Mashinsky partly owned, to engage in speculative investment – a move which the filing said lost Celsius approximately $200 million – as well as $2.8 million transferred to Mashinsky’s own wallet in May 2022 as allegedly fraudulent transfers under U.S bankruptcy code; $12 million transferred to AM Ventures; $5 million transferred Koala LLP – both owned by Mashinsky; among other transfers detailed within a 150 page filing.
Mashinksy’s Response
Mashinsky did not immediately respond to CoinDesk’s request for comment sent via LinkedIn when this article was first published but has since responded with a statement disputing many points raised by Celsius‘ court filing . He stated that he had fully disclosed all transactions prior to leaving Celsius earlier this year– adding that Celsius had been properly managed during his tenure as CEO–and that he would be vigorously defending himself against what he called “baseless allegations” made by his former employer..
Impact On Crypto Lending Market
This news is likely to have significant implications for not just those involved directly or indirectly but also those operating within wider industry–crypto lending platforms especially– due both its high profile nature as well as potential repercussions should it become precedent setting within industry context surrounding funds management practices employed by such companies going forward..
Conclusion
At present time it remains unclear how exactly this case will play out however given seriousness with which it is being brought provides essential reminder of need for clear protocols governing management of customer funds by any business operating within cryptocurrency space regardless if they are custodial or noncustodial services providers , exchanges or lenders etc