Coin News

New Class Action Against Celsius Alleges Offering “Unregistered Securities” and Deceiving Customers

25 Jul, 20222 min readRegulation
New Class Action Against Celsius Alleges Offering “Unregistered Securities” and Deceiving Customers

A new class action lawsuit has been filed against the Celsius entity, its CEO Alexander Mashinsky and its executive directors Shlomi Leon, David Base and Alan Jeffrey Carr, in the United States District Court of New Jersey. It was filed by leading U.S. law firm Bragar Eagel & Squire, P.C., on behalf of all investors who acquired CEL tokens between Feb. 9, 2018, and July 13, 2022.

The class action alleges that Celsius, a financial services company, generates revenue through cryptocurrency trading, lending and borrowing; the sale of its unregistered securities and engaging in proprietary trading.

The complaint refers to Celsius' native asset (CEL) as "securities." In the wake of the June Crisis and Celsius suspending its investors' accounts, it cited that "The price of CEL Tokens plummeted from a peak of $7.73 on June 3, 2021, to a low of $0.28 just over a year later."

The complaint also alleges that Celsius and its affiliates, along with the individual defendants, also violated provisions of the Securities Act by selling nonexempt securities without registering them.

Furthermore, the complaint stated that "the Defendants violated provisions of the Exchange Act by carrying out a plan, scheme, and course of conduct that Celsius intended to and did deceive retail investors and thereby caused them to purchase Celsius Financial Products at artificially inflated prices."

Celsius bankruptcy hearings

The first bankruptcy court for cryptocurrency lender Celsius took place last week on Monday, where its attorneys revealed that the crypto lender had half a million creditors who owed more than $5 billion.

Moments ago, @CelsiusNetwork filed voluntary petitions for Chapter 11 protection and announced that the company initiated a financial restructuring. — Celsius (@CelsiusNetwork) July 14, 2022

Information about its liquidity crisis first surfaced when Celsius declared on June 12 that it was halting all customer withdrawals due to "extreme market conditions."

On July 14, Celsius formally petitioned the Southern District of New York (SDNY) Bankruptcy Court for Chapter 11 bankruptcy protection. For Celsius' creditors, the majority of whom are regular retail investors, court documents depict a troubling picture.

As reported by U.Today, Celsius CEO Alex Mashinsky admitted that the company had a $1.2 billion hole on its balance sheet, according to the company's bankruptcy documents.

Source

Subscribe to get our top stories

Coin News
App StoreApp Store