Today, New York Attorney General (NYAG) Letitia James filed a lawsuit against Alex Mashinsky, former CEO of Celsius Network, the bankrupt cryptocurrency lender. She alleges that Mashinsky repeatedly made false and misleading statements regarding Celsius’ financial position, causing New York residents to invest money in the company and ultimately incur losses.

He also claims that he did not register as a securities and commodities trader.

“As the former CEO of Celsius, Alex Mashinsky promised to lead investors to financial freedom, but he led them down a path to financial ruin,” said Attorney General James. “The law is clear that making false and unsubstantiated promises and misleading investors is illegal.”

As part of the bankruptcy proceedings, Mashinsky filed a statement that appears to indicate that the losses from the May crypto crash were relatively modest at $167 million. Much of the $1.2 billion shortfall occurred much earlier, in 2020 and 2021. And despite this, the company raised $690 million in Series B funding.

The New York Attorney General has been quite active in the field of digital assets. He egregiously banned Tether from operating in New York and agreed to a settlement with the stablecoin firm regarding the misreporting of the reserve assets backing the stablecoin.

In other news today, the judge in Celsius’ bankruptcy ruled that the terms and conditions of the Celsius Earn product effectively meant that the assets belonged to Celsius. While that’s bad news for depositors, the terms were pretty clear. It implies that depositors will not be at the front of the queue for payments.

As part of Mashinsky’s same bankruptcy filing, the former CEO made the same claim. At the time, we wrote: “Mashinsky points out that Celsius’ terms and conditions state that when people hand over cryptocurrency to Celsius, the company can pretty much do whatever it wants with it. And he did.