Following its filing for bankruptcy just weeks after freezing customer withdrawals, troubled cryptocurrency lending firm Celsius Network LLC has been slapped with a proposed class action suit accusing the company of a Ponzi-like con job.
Indeed, the class action, proposed to a federal court in the U.S. state of New Jersey, alleges that Celsius incurred $10 billion by selling unregistered securities in a Ponzi scheme and convinced investors to purchase its financial products at inflated rates, Law360 reported on July 14.
The class action suit document was made available by former U.S. Securities and Exchange Commission (SEC) enforcement attorney John Reed Stark, who posted it on his Twitter account on July 15.
According to the lawsuit, plaintiff Taylor Goines “purchased Celsius Financial Products during the Relevant Period and suffered investment losses” as a result of the conduct of the defendants, including Celsius Network, two related entities, CEO Alexander Mashinsky, and three executive directors – David Barse, Alan Jeffrey Carr, and Shlomi Danier Leon.
Alleged Ponzi scheme unravels
Furthermore, the complaint stated that the recent crypto collapse revealed the fragility of the Celsius ecosystem and the fact that Celsius didn’t have enough assets on hand to meet its withdrawal obligations to the investors. In fact:
“Much like a literal Ponzi scheme, Celsius could only maintain its yield rate promises by continually bringing in new investors whose new…
