59 Year Old Alex Mashinsky Faces 30 Years After Guilty Plea in Celsius Case

TLDR

• Alex Mashinsky pleads guilty to two counts of fraud related to Celsius Network collapse
• He admitted to commodities fraud and manipulating CEL token prices
• Mashinsky personally made $42 million from selling CEL tokens
• Sentencing scheduled for April 8, 2025, facing up to 30 years
• Celsius filed bankruptcy in July 2022 after managing $25 billion at its peak

The founder and former CEO of cryptocurrency lender Celsius Network, Alex Mashinsky, has pleaded guilty to fraud charges in a Manhattan federal court. The 59-year-old admitted to two counts of fraud on Tuesday, marking a turning point in one of crypto’s most high-profile cases.

Mashinsky entered his plea before U.S. District Judge John Koeltl, specifically admitting to commodities fraud and orchestrating a fraudulent scheme to manipulate the price of CEL, Celsius’ in-house token. The guilty plea comes after initially facing seven counts of fraud, conspiracy, and market manipulation charges in July 2023.

During the court proceedings, Mashinsky acknowledged giving Celsius customers “false comfort” through a 2021 interview. In this interview, he falsely claimed that Celsius had received regulatory approval for its “Earn” program, which promised to generate investment returns using customers’ cryptocurrency assets.

The former CEO also admitted to concealing his personal sales of CEL tokens while publicly promoting the asset. Federal prosecutors revealed that Mashinsky personally gained approximately $42 million from selling his CEL holdings at artificially inflated prices.

Under the terms of his plea agreement, Mashinsky has accepted a condition not to appeal any sentence of 30 years or less. Judge Koeltl has scheduled the sentencing for April 8, 2025, where Mashinsky will face the consequences of his actions.

The guilty plea averts a trial that had been scheduled for January 28, 2025. Mashinsky’s defense lawyer, Marc Mukasey, stated after the hearing that “accepting responsibility when and where appropriate is the best way to help everybody move on.”

Celsius Downfall

Celsius Network, founded in 2017, grew rapidly during the COVID pandemic alongside other crypto lenders. The company attracted customers by promising easy loan access and high interest rates to depositors, using their tokens for institutional lending to profit from the interest rate difference.

At its peak, Celsius claimed to manage over $25 billion in assets. However, the company’s fortunes changed dramatically in 2022 when cryptocurrency prices plummeted. This led to a rush of customer withdrawal requests, which the company couldn’t fulfill.

In July 2022, Celsius filed for Chapter 11 bankruptcy protection, leaving many customers unable to access their funds. The company has since exited bankruptcy on January 31 and shifted its focus to Bitcoin mining operations.

The investigation into Celsius has already seen other key figures face legal consequences. The company’s former chief revenue officer, Roni Cohen-Pavon, pleaded guilty in September 2023 and agreed to cooperate with prosecutors.

Federal prosecutors emphasized the deceptive nature of Mashinsky’s actions. U.S. Attorney Damian Williams stated that while Mashinsky profited from selling CEL tokens at artificially high prices, his customers were left to bear the losses when the company declared bankruptcy.

The case against Mashinsky follows a pattern of legal actions against cryptocurrency industry leaders following the market downturn of 2022. This period saw several major crypto companies collapse, including the high-profile bankruptcy of FTX.

The Federal Trade Commission had previously alleged that Mashinsky and his co-defendants falsely marketed Celsius as a safe banking alternative. According to the Department of Justice, Mashinsky’s deception about the company’s health dated back to its early days.

The collapse of Celsius and subsequent legal proceedings highlight the risks within the cryptocurrency lending sector. The company has begun repaying creditors, with recent court filings showing distributions of $2.53 billion to over 251,000 creditors since January 2024.