Celsius (CEL) is being sued for offering "Unregistered Securities" and deceiving customers

Celsius, its CEO Alexander Mashinsky, and its executive directors Shlomi Leon, David Base, and Alan Jeffrey Carr have all been named defendants in a new class action case filed in the United States District Court of New Jersey.

It was submitted on behalf of all investors who purchased CEL tokens between February 9, 2018, and July 13, 2022 by renowned U.S. law firm Bragar Eagel & Squire, P.C.

According to the class action lawsuit, financial services provider Celsius makes money by trading, lending, and borrowing cryptocurrencies, selling unregistered securities, and engaging in proprietary trading.

The native asset of Celsius (CEL) is referred to as "securities" in the lawsuit. It was stated that "The price of CEL Tokens plunged from a peak of $7.73 on June 3, 2021, to a low of $0.28 just over a year later" as a result of the June Crisis and Celsius suspending the accounts of its investors.

Along with the individual defendants, the lawsuit also claims that Celsius and its affiliates sold nonexempt securities without first registering them, in violation of the Securities Act.

Additionally, according to the complaint,

"The Defendants violated provisions of the Exchange Act by implementing 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."

When Celsius announced on June 12 that it was stopping all customer withdrawals because of "extreme market conditions," information about its liquidity crisis first came to light.

On July 14, Celsius formally filed for Chapter 11 bankruptcy protection with the Southern District of New York (SDNY) Bankruptcy Court.

Court records paint a disconcerting image for Celsius' debtors, the majority of whom are typical retail investors.

According to the company's bankruptcy paperwork, Celsius CEO Alex Mashinsky acknowledged that the company had a $1.2 billion hole on its balance sheet.

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