Alex Mashinsky had been trying to obtain a dismissal for a lawsuit that had been filed against him by Letitia James, the New York Attorney General (NYAG).
However, the former CEO of Celsius would now have to defend himself in the said lawsuit because his request was dismissed by a New York County Supreme Court Justice.
The decision of the court has now blocked Mashinsky’s attempt to stop the NYAG from seeking to ban him from working as a company officer in New York and from issuing securities.
According to a report, the former chief executive of Celsius Network, Alex Mashinsky had submitted a request to dismiss the lawsuit that the New York Attorney General had filed against him.
But, a United States Judge opted to turn his request down, which means that Letitia James can now move forward with trying to prevent Mashinsky from working in the state.
Margaret Chan, the New York County Supreme Court Justice, said in her judgment that the lawsuit from the New York Attorney General should stand.
According to the judge, the accusations that have been made in the lawsuit are enough to make a case against the ex-CEO.
In her ruling, Justice Chan declared that the allegations in the lawsuit were sufficient enough to show a plausible inference that the alleged misstatements from the former CEO encouraged new investors and prompted them to deposit their funds in the interest-earning accounts of Celsius Network.
The filing of the lawsuit against Mashinsky had occurred back in January and the New York Attorney General had decided to take action after becoming aware of his actions.
According to Letitia James, the former CEO had made misleading and false statements about the financial well-being of Celsius Network.
Furthermore, the accusations against the former boss of the now-bankrupt crypto lender also include inducing thousands of investors to invest billions of dollars worth of digital assets onto the platform.
After the New York Attorney General filed the lawsuit against Mashinsky, he responded by filing a motion for getting it dismissed.
The basis for this motion was that the alleged false and misleading statements had been immaterial and nothing more than ‘nonactionable puffery’.
But, the latest report said that Justice Chan was not in agreement with Mashinsky’s description of his interactions with investors of the crypto lender.
Instead, the judge said in her ruling that the lawsuit’s allegations made about Mashinsky are of an individual who deliberately misrepresented the financial status of his company for keeping it afloat.
Celsius Network had filed for bankruptcy last year, not long after the collapse of the Terra network, and had resulted in losses of billions of dollars for its investors.
This was before the downfall of the FTX crypto exchange. Mashinsky is not the only former CEO to have had a lawsuit filed against him.
Sam Bankman-Fried, the former CEO of FTX, also has both civil and criminal charges filed against him and his trial is going to take place in October.