Celsius Gets a Lawsuit, Was Running Like a Ponzy Scheme

Celsius Gets a Lawsuit, Was Running Ponzy Scheme

As a new lawsuit claims that a troubled cryptocurrency lending business deceived investors, the walls are coming around it.

In addition to being sued, Celsius Network declared bankruptcy last week, is now accused of operating like a Ponzi scheme.

Plaintiff Taylor Goines claims the following in a class action lawsuit filed on Wednesday in a US district court in New Jersey:

According to the lawsuit, “Defendants engaged in acts, practices, and a course of conduct that functioned as a fraud and deceit upon the Class Members and resulting in extraordinarily inflated market prices for Celsius Financial.”

According to the lawsuit, Celsius is a Ponzi scheme because it could not meet its promised return on investment rate without bringing on new investors.

Like a real-life Ponzi scheme, Celsius kept its return rate claims by continuously bringing in new investors, whose funds would be used to settle the dividend for existing investors.

The lawsuit claims that when it comes to recovering damages for losses suffered by investors,

“Defendants employed devices, schemes, and artifices to defraud; made untrue
statements of material fact and omitted to state material facts necessary to make the statements made
not misleading; and engaged in acts, practices, and a course of business that operated as a fraud and
deceit upon the Class members that resulted in artificially high market prices for Celsius Financial
Products in connection with the March 2021 launch, in violation of Section 10(b) of the Exchange
Act and Rule 10b-5 promulgated thereunder. “

Celsius Network, Celsius Lending, Celsius KeyFi LLC, and business leaders like CEO Alexander Mashinsky, CSO Shlomi “Daniel” Leon, David Barse, and Alan Jeffrey Carr are all named as defendants.

The class action complaint is the most recent in a string of events for the centralized financial platform, which initially declared back on June 12th that it was temporarily suspending withdrawals and transfers owing to the incredibly volatile cryptocurrency markets.

Celsius announced its intention to file for Chapter 11 bankruptcy two days ago as part of a restructuring plan to stabilize the company and maximize stakeholder value.

What Did the CEO Mashinsky Say?

“This is the right decision for our community and company. We have a strong and experienced team in place to lead Celsius through this process. I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company.”

With a value of $0.78, Celsius Network (CEL) is down at 3.45 percent over the past 24 hours. CEL had had turbulent downward price behavior since dropping as low as $0.18 on June 13 before temporarily rising above $1.50 eight days later.

Celsius VS USD chart
Celsius VS USD chart. Source: Tradingview.com

Since reaching an all-time high of $8.05 in early June 2021, the alternative currency has decreased by more than 90%.

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