One of the hottest cases of crypto fraud in 2022 was the Celsius Network, which allegedly defrauded its investors of billions of dollars. Who is the figure behind it?
Alex Mashinsky is a co-founder of crypto lender Celsius Network, which allegedly scammed its investors. Mashinsky is an entrepreneur who often refers to himself as the Robin Hood of the modern era.
The 57-year-old man often promotes Celsius as a safe alternative to banking, but was later revealed to be hiding that they lost hundreds of millions of dollars in high-risk investments, at least that's what Letitia James, New York's Attorney General, wrote in her lawsuit.
The lawsuit calls for Mashinsky to be barred from doing business in New York and must pay damages and restitution, we were quoted as saying by Reuters, Friday (6/1/2023).
This lawsuit adds to the long bad record of the crypto business, which was also busy with the case of the crypto exchange FTX, which was also suspected of defrauding its investors of billions of dollars.
Mashinsky himself is a man of Ukrainian origin whose family moved to Israel. He fell in love and then decided to move to New York after visiting the city in 1988.
Since moving to New York until now, he has founded eight companies. One of them is Arbinet, which went public in 2004, and Transit Wireless, a company providing WiFi services on New York City subways.
Some of the interesting things about Mashinsky's journey are that he claims to be the creator of voice over internet protocol (VoIP), the Uber ridesharing service, and the basic idea of cryptocurrency.
In 2017, Mashinsky started getting involved in the crypto world, when his investment company Governing Dynamics took blockchain company MicroMoney as a strategic partner, and in the same year he founded Celsius.
In hundreds of interviews, blog posts, and various other media as the "face" of Celsius, Mashinsky often promises that Celsius consumers will get high profits if they deposit digital assets on their platform, of course with minimal risk, similar to promises in investment cases. another fool.
Celsius promises returns of up to 17% to its customers, one of the highest in the industry. "We take it from the rich," Mashinsky said repeatedly. This is what made Mashinsky call himself the robin hood of the modern era, a figure who is often told to steal from the rich to give to the poor.
Of course, many are lulled by Mashinsky's promise. In early 2022, Celsius successfully raised USD 20 billion in digital assets from its investors. But then they have trouble generating enough income to pay returns to investors.
That's what makes them move to riskier investments, hoping to get a bigger return. However, this step is not explained to consumers, and they still claim to invest in the realm of low risk.
Even Mashinsky did not hesitate to claim that Celsius has billions of dollars in liquidity, which was revealed in a video on YouTube on June 10. Two days later, Celsius stopped withdrawing consumer funds to "stabilize liquidity and operations".
Then on July 13, Celsius registered bankruptcy, with a recorded deficit of USD 1.19 billion.