Celsius, FTX Investors Face Wrath of Lawsuits: UCC Proposes Action Against Execs
• Creditors of both Celsius and FTX have filed lawsuits against the respective firms for various alleged infractions.
• In particular, Celsius creditors proposed to sue co-founder Alex Mashinsky and other former executives for fraud, recklessness, gross mismanagement and self-interested conduct.
• The SEC has also launched an investigation into the possible misconduct of certain cryptocurrency exchanges.
Celsius and FTX Hit With Multiple Lawsuits
Creditors of both Celsius and FTX have filed lawsuits against the respective firms for various alleged infractions. In particular, Celsius creditors proposed to sue co-founder Alex Mashinsky and other former executives for fraud, recklessness, gross mismanagement and self-interested conduct. This week’s Crypto Biz delves into recent lawsuits targeting Celsius co-founder Alex Mashinsky and several venture capital firms that backed FTX during previous investment rounds.
Celsius Creditors Committee Proposes Suing Mashinsky
The stunning collapses of Celsius and FTX destroyed many lives — early adopters who had the foresight to understand the unique value propositions of Bitcoin BTC $24,456 Bitcoin -0.74% MARKET CAP$471.92bVOL. 24H$1.02b BTC $41.42k were left with practically nothing when both platforms halted withdrawals, shuttered their doors and eventually filed for bankruptcy. In a complaint filed in a bankruptcy court on Feb 14th, attorneys representing Celsius’ creditors proposed to sue co-founder Alex Mashinsky and other former executives for such misdeeds as breaching their fiduciary obligations to Celsius as well as fraudulent transfers among others causes of action.
FTX Investors Also Facing Possible Legal Action
Creditors of FTX are turning their attention to the exchange’s venture backers in search of legal restitution from their losses due to its collapse earlier this year as well. According to reports from Bloomberg, some investors are looking at suing venture capital firms Lightspeed Venture Partners, Susquehanna International Group LLP (SIG) & GSR Capital Ltd., who invested in previous funding rounds earlier this year before the collapse happened in February 2021 after it was unable to meet customer withdrawal requests due to liquidity issues caused by large amounts of derivative trading volume on its platform which led to massive losses on certain positions held by customers on its platform prompting them start exiting en masse leading up to its eventual shutdown & bankruptcy filing shortly thereafter afterwards respectively..
SEC Investigating Cryptocurrency Exchanges
In addition to these lawsuits targeting specific entities involved with collapsed crypto exchanges like FTX & Celsius respectively ,the US Securities & Exchange Commission (SEC) is reportedly launching an investigation into potential misconduct among certain cryptocurrency exchanges themselves according Securities Industry & Financial Markets Association (SIFMA) president Kenneth E Bentsen Jr “We’re very pleased that they’re taking a look at how cryptocurrencies are being traded,” he said . “It’s important that there is appropriate oversight.” The SEC declined comment on these reports .
Blockchain Use Cases Offer Hope To Crypto Community
Despite all this negative news circling around crypto markets lately ,it appears there is still hope yet as blockchain technology continues proving itself useful in multiple use cases ranging from finance ,health care industry ,supply chain management etc . A prime example comes from South Korea where local banks recently started using blockchain technology powered KYC/AML solutions allowing them more reliable way share customer data between one another without risking sensitive information falling into wrong hands while also saving time & money through automated processes over traditional manual ones traditionally used by most financial institutions worldwide today .