A court-appointed examiner is expected to issue a report on whether the bankrupt cryptocurrency company Celsius Network is a Ponzi scheme. The report could put pressure on Alex Mashinsky, the company's founder and chief executive, who is already facing fraud charges.
Last year, New Jersey-based Celsius Network stopped offering withdrawal services to its customers, and in July of the same year, the company filed for Chapter 11 protection from creditors in Manhattan. Its balance sheet showed the company with a $1.19 billion deficit.
Celsius Network's customers accused the company of being a Ponzi scheme, and in September, U.S. Bankruptcy Judge Martin Glenn appointed former prosecutor Shoba Pillay as an independent examiner to investigate the allegations and report on the company's handling of cryptocurrency deposit. After an agreement was reached, the company agreed to the review.
Judge Glenn subsequently also expanded Examiner Pillay's duties, requiring her to resolve customer complaints against Masinski. Earlier this month, New York Attorney General Letitia James sued Masinski for concealing the negative status of the platform and defrauding investors out of billions of dollars worth of digital assets. Masinski's lawyer said his client denies the allegation.