This article originally appeared in FIN, the best newsletter about fintech; subscribe here.
On Thursday January 5, New York State attorney general Letitia James filed a lawsuit against former Celsius founder and CEO Alex Mashinsky, charging that he defrauded tens of thousands of customers by promising them unrealistic returns on their investments, while investing their money in highly risky activities that were never disclosed.
Before declaring bankruptcy in July 2022, Celsius was flying about as high as any crypto lender ever got. The firm had raised $1 billion in venture capital, had made serious acquisitions, and featured a magnetic CEO who frequently preached the crypto gospel on social media. Mashinsky portrayed himself as an advocate for underprivileged investors, “not just the 1%”; he was often seen wearing a black T-shirt that said “Banks are not your friends.” In May 2022, the company’s Bitcoin mining unit filed a confidential S-1 in preparation for going public. Ultimately Celsius attracted $20 billion from investors all across the world.
Especially in retrospect, Celsius’s offerings epitomize the realm of “too good to be true.” Celsius promised consumers returns as high as 17%, for doing nothing more than handing…
