The Official Committee of Unsecured Creditors filed a lawsuit with the bankruptcy court after six months of investigation, accusing Mashinsky and other Celsius executives of gross mismanagement.
The complaint was filed on February 14 by the lawyer representing Celsius creditors. The Committee is composed of seven account holders and was formed by the U.S. Trustee in July 2022. The group is intended to represent all account holders and unsecured creditors of Celsius.
Related: Celsius may issue a new token to compensate creditors
In the preliminary statement, the lawyers wrote:
The Committee’s investigation has uncovered significant claims and causes of action based on fraud, recklessness, gross mismanagement, and selfinterested conduct by the Debtors’ [Celsius] former directors and officers.
The complaint explicitly mentions these names:
- Alex Mashinsky, co-founder, director, and former CEO
- Daniel Leon, co-founder, director, and former CSO and COO
- Hanoch “Nuke Goldstein, co-founder and CTO
- Harumi Urata-Thompson, former CFO and CIO
- Jeremie Beaudry, former General Counsel and CCO
- Johannes Treutler, former head of Celsius’ trading desk and person in charge of purchasing CEL tokens on behalf of Celsius
- Aliza Landes, the former VP of Lending at Celsius and spouse of Daniel Leon
- Kristine Mashinsky, the spouse of Alex Mashinsky
Those parties were aware Celsius was promising its customers interest payments that it could not afford and did nothing to fix the problem.
In addition, according to the Committee’s findings, the company lost about $1 billion in one year because of negligent investment by Celsius’ former executives. The mismanagement caused another quarter billion dollars in losses, followed by further losses caused by an unwillingness to fix the problems.
The complaint also states that Celsius drove up the price of CEL tokens for self-interest:
They secretly sold tens of millions of CEL tokens (or were aware of such sales) as they directed Celsius to purchase the CEL tokens on public markets.
When it finally became apparent that Celsius wouldn’t escape bankruptcy, former executives withdrew assets from the sinking ship while actively urging customers to keep their assets on the platform.
A hearing on the proposed complaint will be held on March 8, 2023.
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