Celsius creditors committee proposes suing Mashinsky, other Celsius execs

The official committee of Celsius lenders is proposing to sue Celsius co-founder Alex Mashinsky and other executives for “fraud, recklessness, gross mismanagement and self-serving behavior” that ultimately led to the collapse of the crypto lender.

In the proposed complaint Filed in New York bankruptcy court on Feb. 14, attorneys representing the Official Committee of Unsecured Creditors said the move follows six months of investigations into current and former Celsius directors, officers and employees.

The committee is made up of seven Celsius account holders and was appointed the U.S. Trustee in July 2022. The committee represents Celsius account holders as well as unsecured creditors.

“The Committee’s investigation has uncovered significant claims and causes of action based on fraud, recklessness, gross mismanagement and self-serving behavior by former directors and officers of Debtors,” White & Case LLC lawyers wrote.

The proposed action, which seeks damages in an amount that must be proven in court, seeks to bring claims and causes of action against the following Celsius executives, persons, and related entities:

  • Alex Mashinskiy, co-founder, director and former CEO
  • Danielle Leon, co-founder, director and former CSO and COO
  • Hanoch “Nuke Goldstein, co-founder and CTO
  • Harumi Urata-Thompson, former CFO and CIO
  • Jeremy Beaudry, Former General Counsel and Commercial Director
  • Johannes Treitler, former Head of Trading at Celsius and person in charge of purchasing CEL tokens on behalf of Celsius.
  • Alisa Landes, former Vice President of Lending of Celsius and wife of Daniel Leon.
  • Kristin Mashinsky, wife of Alexei Mashinsky

“Mr. Mashinsky, Mr. Leon, Mr. Goldstein, Mr. Baudry, Ms. Urata-Thompson and Mr. Treitler have breached their fiduciary obligations to Celsius,” the lawyers wrote, adding:

“These parties knew that Celsius was promising its customers interest payments they couldn’t afford and did nothing to fix the problem.”

Lawyers also argued that the executives made “careless, reckless (and sometimes self-serving) investments” that caused Celsius to lose $1 billion in one year, and mismanagement resulted in another quarter of a billion dollars in losses “because they might have inadequately take into account the assets and liabilities of the company.

“After this loss, they did not invest and develop the company’s systems to properly address the problem, which led to further losses,” they said.

The petition also alleges that the executives ordered Celsius to spend “hundreds of millions of dollars” in public markets to inflate the price of CEL tokens, while they “secretly sold tens of millions of CEL tokens (or knew of such sales)” for their own purposes. own benefit.

Extract from a recent petition from the official committee of Celsius creditors. Source: Strict

“They sat on their hands while Mr. Mashinsky recklessly bet hundreds of millions of dollars on the movement of the cryptocurrency market. They covered up Mr. Mashinsky’s repeated lies about Celsius’ investments and financial condition.”

Judge Denies Celsius Users’ Petitions for Asset Recovery

“Finally, when it became apparent that Celsius would need to file for bankruptcy, potential defendants removed the assets from the sinking ship. […] while actively encouraging clients to keep their assets on the Celsius platform,” the lawyers added.

The Celsius creditor committee said the proposed complaint was just “the first of many steps” in its investigation of potential wrongdoing by former Celsius executives and the recovery of assets to the victims.

The proposed complaint will be heard on March 8, 2023.

Cryptooshala contacted Celsius for comment but received no immediate response.

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