Complaint alleges crypto lender promised safety but turned to risky assets as it grew.
... [+], claiming he “engaged in a scheme to defraud hundreds of thousands of investors” by offering loan products promising yields of up to 17% with “minimal risk.”
“These promises were false—but proved wildly popular,” according to the action filed Thursday in the state’s Supreme Court by Attorney General Letitia James. on July 13 to stabilize its business after pausing withdrawals a month earlier. The company claimed it was unable to pay its customers because some of its assets were illiquid.alleges Mashinsky “told investors that Celsius would generate sustainably high returns by making low-risk collateralized loans to first-tier institutions and cryptocurrency exchanges as well as overcollateralized loans to retail borrowers.
But as the company grew, the suit alleges, ”it struggled to generate enough revenue to pay the promised yields on investors’ deposits. In search of revenue, Celsius moved into significantly riskier investments, extending hundreds of millions of dollars in uncollateralized loans, and investing hundreds of millions of dollars in unregulated decentralized finance platforms.
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