Sunday, June 23, 2024

Celsius slapped with new lawsuit for selling unregistered securities.

The already troubled Celsius has been slapped with a new class-action lawsuit by an Arkansas resident, Taylor Goines, for selling unregistered securities. He equated Celsius’ operation to a Ponzi scheme, wherein new investors have to come on board to pay yield to old investors continuously.

Last week, the crypto lender filed for Chapter 11 bankruptcy in New York after freezing customer funds in early June. Through the bankruptcy filing, Celsius hoped to get breathing room to stabilize its operations. The company said if it hadn’t halted withdrawals, it would have undergone a bank run scenario where early withdrawers would have had their transactions honored. But then, the outcome for smaller withdrawals would have been less certain.

Celsius is said to have ventured into high-risk investments in 2020 after the appetite for institutional loans dropped. It invested funds in decentralized finance (DeFi) products without assessing the accompanying risks. The new lawsuit alleges that Celsius made misleading statements about certain products being manageable. The company failed to register yield or interest-bearing products with the Securities and Exchange Commission (SEC). The lawsuit says Celsius violated Section 5(a), 5(c), and 12(a) of the Securities Act. Section 5(a) is about the interstate sale of unregistered securities, and in Section 5(c), sellers have to register security.

Furthermore, there are allegations that Alexander Mashinshy and other Celsius executives became richer from inflated CEL token prices at their customers’ expense. It should be noted that the company is also being sued by a former employee for manipulating the cryptocurrency markets, as well as for unsound accounting practices.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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