3 weeks ago
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Alexander Mashinsky has just pleaded guilty to two counts of fraud on commodities and securities in the case of the crypto platform Celsius.
The former CEO and founder of the cryptocurrency lending company regretted orchestrating a true fraud against investors and accepted the charges.
Now it will be Judge Koelt to determine the sentence for Mashinsky, who on April 8, 2025, could sentence the defendant to 30 years in prison.
Let’s see all the details of the news below.
The case of the crypto platform Celsius
Celsius, former CeFi platform founded in 2017, was considered one of the most solid and secure in the crypto world for loans and for deposits with interest.
The company had grown significantly in the early years, reaching a “Net Asset Value” of about 25 billion dollars by the fall of 2021.
During the Covid pandemic, it achieved great success by promising staggering yields on deposits, while the money was lent to institutional investors.
Given its highly advantageous “Earn” and “Custody” programs, it had attracted the presence of many retail investors, becoming one of the largest crypto banks in the world.
In June 2022, however, the house of cards began to collapse: at a certain point, Celsius suspended all withdrawals from the platform.
Initially, it reassures the users, who still had 4.7 billion dollars in cryptocurrencies on the platform, of having sufficient liquidity to process all the requests.
If it weren’t for the fact that just a month later Celsius formally declares bankruptcy by appealing to the Chapter 11 of the US bankruptcy code.
The prices of crypto that were collapsing during the bear market and the previous failure of lenders 3AC and Voyager dealt the final blow to the company.
Alexander Mashinsky, founder and CEO of Celsius, has been investigated on 7 charges, considered the main person responsible for the fraud against customers.
On January 31, 2024, the platform managed to emerge from bankruptcy, thanks especially to the growth of prices in the digital asset market.
Since then, Celsius has undergone an internal restructuring and has launched into the profitable Bitcoin mining sector.
Alex Mashinksy, former CEO and founder of Celsius, pleads guilty to two charges
Alex Mashinsky was initially indicted on July 13, 2023, on a total of 7 charges by federal prosecutors in Manhattan for the Celsius Network case.
The charges were related to fraud, conspiracy, market manipulation, and unfair practices with which he would have deceived the platform’s investors.
Mashinksy on that occasion declared himself not guilty, managing to postpone the final sentence for months.
Now, however, with an unexpected twist, the same entrepreneur has chosen to repent before the United States District Judge John Koeltl.
During the hearing on Tuesday, December 3, he pleaded guilty to two of the seven charges brought against him, namely commodity fraud and market manipulation.
In court, Mashinsky admitted to giving Celsius customers a “false comfort” by falsifying the platform’s registration with federal regulatory agencies.
In particular, he would have given an interview in 201 in which he stated that the Earn program had received formal approval from the SEC.
From his words reported in the press release of the New York Department, a sense of shame and remorse is evident for the crypto fraud carried out:
“I know that what I did was wrong and I want to try to do everything possible to make amends”.
As part of his plea agreement with the prosecutors, Mashinsky agreed not to appeal any sentence of 30 years or less.
Now Mashinsky, on the verge of his 60th birthday, risks spending the rest of his life in prison.
On April 8, Judge Koeltl will issue a final ruling that will determine the future of the former CEO of Celsius.
At the end of Tuesday’s hearing, Mashinsky’s defense lawyer addressed the journalists as follows, reflecting the defendant’s sense of guilt:
“Sometimes, taking responsibility when and where appropriate is the best way to help everyone move forward”.
The illicit gains of Mashinsky through manipulation of the crypto market
Alex Mashinsky obtained strong illicit gains from the market manipulation of the crypto CEL, utility token of the Celsius platform.
The federal prosecutors in Manhattan have indeed stated that the entrepreneur deceived Celsius customers to persuade them to invest in the cryptocurrency.
In particular, it would have artificially inflated the value of CEL, in addition to the false promises about the company’s health and the solidity of the business.
In total, it was revealed that Mashinsky cashed in approximately 42 million dollars from the personal sale of his holdings in CEL.
Regarding the mega scam Celsius, U.S. Attorney Damian Williams stated that the company was never profitable.
Furthermore, it would have encouraged users to invest with false promises, promising great returns in exchange for a contained risk.
In reality, the users’ money has always been used for risky bets with institutional investors. These are the words of Williams:
“Using catchy slogans like “Unbank Yourself”, Mashinsky promised that Celsius would keep customers’ cryptocurrencies as safe as money in a bank, but that, unlike a bank, Celsius would return most of the profits from its business to the users.”
As part of his guilty plea, Mashinsky agreed to forfeit the proceeds from his illegal schemes.
On the other hand, what will he do with all this money if he will likely spend the rest of his life in prison?
English (US) ·