Celsius’ official creditors’ committee has proposed a lawsuit be filed against the company’s co-founder, Alex Mashinsky, and other executives for “fraud, recklessness, gross mismanagement and self-serving conduct,” all of which contributed to the latest failure of the Celsius company. cryptocurrency lender.

Attorneys for the Official Committee on Unsecured Creditors said in a proposed lawsuit filed in New York Bankruptcy Court on February 14 that the action comes after six months of investigations into current and former directors, officers and employees. of Celsius.

The US Trustee selected seven Celsius account holders to serve on the committee last July. The group was established by the United States Receiver. Along with the interests of unsecured creditors, the committee acts as a representative of those who own Celsius accounts.

According to documents written by attorneys for White & Case LLC, “the Committee’s investigation has uncovered substantial claims and causes of action based on fraud, negligence, gross mismanagement, and self-serving behavior on the part of the Debtors’ former directors and officers.”

The anticipated legal action is intended to bring claims and causes of action against the following Celsius executives, individuals and companies that are affiliated with them:

The lawyers wrote in their letter that “Mr. Mashinsky, Mr. Leon, Mr. Goldstein, Mr. Beaudry, Ms. Urata-Thompson, and Mr. Treutler breached their fiduciary duties to Celsius.” They went on to say that “those parties knew that Celsius was promising interest payments to its customers that it was unable to pay and did nothing to remedy the problem.”

Lawyers have also alleged that executives made “negligent and reckless investments” that caused Celsius to lose $1 billion in a single year, while mismanagement led to another quarter-billion-dollar loss “because they failed to account for adequately the assets and liabilities of the company. .” This loss was attributed to the fact that executives “failed to adequately account for the company’s assets and liabilities.”

According to the plaintiffs’ allegations, “after that loss, they failed to invest in or improve the company’s systems to adequately resolve the issue, resulting in subsequent losses.”

The motion also alleges that Celsius executives ordered the company to spend “hundreds of millions of dollars” on public markets to artificially inflate the price of CEL tokens, while at the same time the executives “secretly sold tens of millions of CEL tokens”. for their own benefit.“

They did nothing except watch as Mr. Mashinsky carelessly bet hundreds of millions of dollars on how the cryptocurrency market would move while they did so. They covered up Mr. Mashinsky’s persistently dishonest statements about Celsius’ investments and financial condition.

The lawyers went on to say that “eventually, when it became clear that Celsius would have to file for bankruptcy, the prospective defendants removed assets from the sinking ship while actively encouraging clients to keep their assets on the Celsius platform,” the lawyers did. potential defendants. this.

Celsius’ creditors’ committee said the planned lawsuit was only the “first of many stages” in its investigation into alleged wrongdoing by former Celsius executives and the restitution of assets to victims.

On March 8 there will be a hearing on the planned complaint that was filed.