Alex Mashinsky, the founder and former CEO of Celsius Network, has been ordered to serve 12 years in a federal prison on charges of securities and commodities fraud. The sentence, handed down by U.S. District Judge John G. Koeltl, is the culmination of a guilty plea in December 2024. He pleaded guilty to defrauding investors regarding the security of their investments and altering the price of Celsius’s in-house token, CEL, for his own gain. At its height, Celsius oversaw more than $25 billion in customer assets, guaranteeing investors high returns on crypto deposits. The platform failed in 2022 when market volatility hit, leaving customers without access to their money.
Details of the Fraud
Mashinsky’s scheme involved lying to customers about Celsius’s financial position and the dangers of its investment strategies. He misrepresented to customers that their money was securely invested when he made risky, uncollateralized loans and secret financial wagers. Furthermore, Mashinsky manipulated the value of the CEL token by using customer money to artificially inflate its value, from which he gained more than $48 million. These activities resulted in substantial monetary losses to customers, many of whom lost their life savings.
Legal Proceedings and Sentencing
Mashinsky was arrested in July 2023 and indicted on fraud and market manipulation charges. He pleaded guilty to two counts in December 2024, admitting his participation in the scheme. Prosecutors had asked for a 20-year sentence, highlighting the intentional and fraudulent nature of his conduct. Mashinsky’s defense argued for a lesser sentence, referencing his history and lack of ill intent. In the end, the court handed down a 12-year sentence, plus an order to forfeit $48 million. The case highlights the need for regulation in the cryptocurrency space and the repercussions of scams.
Also read: India’s Supreme Court Presses for Cryptocurrency Regulations Amid Legal Ambiguity
