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- A resident of Arkansas has sued Celsius. Accusing the platform of running a Ponzi scheme.
- CEO Mashinsky and other executives are accused of profiting at customers’ expense.
- Last week Former Celsius employee Jason Stone also filed a lawsuit against the platform.
Taylor Goines, a resident of Arkansas, has sued Celsius accusing the platform of selling unregistered securities. The plaintiff has likened the operations conducted by the platform to a Ponzi scheme.
John Reed Stark originally made the filing public. He is the owner of John Reed Stark Consulting. The agency offers services to companies in the fintech space with SEC and FINRA compliance. Goines represents everyone that bought Celsius Earn Rewards, Celsius loans, and CEL tokens, in the period between Feb 2018 and the present.
He accused the crypto lender of running a Ponzi Scheme. The new investors have to constantly pay yield to old investors. Early this week, the firm filed for Chapter 11 bankruptcy in New York. The announcement came after the platform stopped withdrawals for customers in June. The company stated that the bankruptcy filing will have allowed it to stabilize its operations. The company said it would have to face a “bank run” if it had not disabled customers’ funds last month.
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Allegations On Mashinsky And Other Executives
The income of Celsius was derived from lending to institutional borrowers at higher interest rates than it granted for deposits. The platform marketed products as high-yield investments exhibiting low risk.
As per the filing, Celsius and its executives in many instances found making misleading statements regarding the management of some products. Also, how the company was unsuccessful in registering their yield or interest-bearing products with the SEC.
The allegations also included accusations on Celsius executives including Alexander Mashinsky, the CEO. The filling alleged the executives have made a profit for themselves at the cost of customers’ loss. The plaintiff wants restitution gained from the difference between purchase and sale of Celsius products.
Jason Stone, the former Celsius employee, filed a lawsuit against the firm last week. Stone alleged the firm of illicit accounting practices and influencing the crypto market.Stark asks for a trial by jury. The plaintiff is quite confident that they would win it.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
