Celsius’ former CEO, Alex Mashinsky, will have to face a civil fraud lawsuit after a Supreme Court judge denied his motion to dismiss the case. New York County Supreme Court Justice Margaret Chan issued an order on Aug. 4, denying Mashinsky’s motion to dismiss the suit originally filed by New York Attorney General, Letitia James, in January. Mashinsky had argued that the complaint failed to state a legally-cognizable claim against him, but the judge found sufficient allegations to support the inference that Mashinsky’s misstatements induced new investors to deposit money in Celsius’ earn accounts.
As a result, Mashinsky has been ordered to file an answer to the complaint within 30 days of the order. This comes after Celsius filed for Chapter 11 bankruptcy on July 14, 2022, and Mashinsky resigned as the CEO in September of that year. In addition to the civil fraud lawsuit, Mashinsky is also facing civil cases from the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), as well as criminal charges.
Meanwhile, Tether, the stablecoin issuer, celebrated a legal victory after a U.S. District Court dismissed a class action lawsuit regarding its reserves on Aug. 4. The lawsuit, filed by Matthew Anderson and Shawn Dolifka in 2021, claimed that Tether did not maintain the same amount of reserves as the Tether tokens in circulation. Judge Laura Taylor Swain of the U.S. District Court for the Southern District of New York dismissed the case, stating that the plaintiffs’ claims lacked any legal merit. Tether and Bitfinex, its affiliated exchange, expressed satisfaction with the dismissal, emphasizing that the lawsuit was baseless.
Turning to China, the government has announced plans to crack down on overseas telecom fraud, particularly in relation to crypto and artificial intelligence. The Commission for Political and Legal Affairs of the Communist Party of China (CPC) Central Committee has warned about cyber criminals using new methods, such as blockchain, metaverse, cryptocurrencies, and artificial intelligence. This announcement comes after reports of Chinese nationals falling victim to telecom fraud, where scammers impersonate public security personnel to obtain personal information, leading to extortion and ransom.
In the cryptocurrency industry, Worldcoin, a digital ID platform, has reported significant growth in user numbers. According to the company, weekly global World ID verifications more than doubled in the seven days following the launch of the retina-scanning digital ID platform. The number of weekly active World App users also tripled, with over ten times the weekly account creations during the same period. Worldcoin claims to have over 2 million users and highlights that the increased demand for World ID as a standalone product demonstrates sustained global interest.
Despite these positive developments, a report published by Cointelegraph on Aug. 4 raised concerns about Worldcoin’s security. The report stated that Worldcoin’s Orb had a serious security vulnerability in operator onboarding, as highlighted by CertiK.
In other news, the Huobi crypto exchange has been experiencing large outflows over the weekend, amid ongoing concerns and rumors regarding its solvency. Chinese authorities are reportedly investigating the exchange’s executives. Meanwhile, Elon Musk debunked rumors of a token launch for his micro-blogging platform, X (formerly known as Twitter), stating there would “never” be a token launch.
These recent developments highlight the ongoing legal and regulatory challenges faced by individuals and companies in the crypto industry, as well as the increasing focus on combating fraud and ensuring investor protection.
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