Alexander Mashinsky, the founder and former CEO of Celsius Network, has pleaded guilty to orchestrating one of the largest frauds in crypto history—leaving investors billions in the hole and facing a potential 20-year prison sentence.
At a Glance
- Mashinsky admitted to commodities and securities fraud
- Prosecutors seek a 20-year prison term for Celsius’s founder
- Celsius collapse caused $7 billion in customer losses
- Mashinsky personally gained $48 million through token inflation
- Sentencing scheduled for May 8, 2025
Massive Fraud Uncovered
Alexander Mashinsky, 59, pleaded guilty in December 2024 to charges of securities fraud and commodities fraud tied to the collapse of Celsius Network. The platform, once hailed as a crypto alternative to traditional banks, raised over $20 billion from investors before imploding in 2022. Prosecutors say Mashinsky lied about the safety and stability of Celsius’s business model to lure retail investors.
Mashinsky used catchphrases like “Unbank Yourself” to project trust, all while deploying customer funds into risky, uncollateralized crypto bets. He also secretly inflated the price of the Celsius token (CEL), allowing him to offload his holdings for a $48 million personal gain, leaving customers “holding the bag” when the company collapsed.
Watch AP’s report on the fallout at Prosecutors Seek 20-Year Prison Term for Celsius CEO.
Defense Pushes Back
Mashinsky’s defense paints a very different picture. His attorneys argue that the Celsius failure stemmed from the broader crypto market downturn, not criminal intent. In a memo submitted to the court, they emphasized his background as a Ukrainian immigrant, a veteran of the Israeli Defense Forces, and a family man, stating, “He never acted with the intent to hurt anyone… and has never been driven by greed.”
But prosecutors remain unswayed. U.S. Attorney Damian Williams called the scheme “one of the biggest frauds in the crypto industry,” citing Mashinsky’s direct role in manipulating CEL prices and misleading investors about company finances.
Sentencing and Industry Fallout
The Department of Justice is asking the court for a 20-year sentence, arguing that Mashinsky’s calculated deceit cost customers over $7 billion. The request underscores the government’s intent to make an example of him as it tightens oversight of crypto fraud.
Internal Celsius documents further implicate Mashinsky. One former executive reportedly wrote, “[T]he issue is that people are selling [CEL] and no one is buying except for us… the value was fake,” confirming that customer money was used to prop up the token in-house.
The sentencing hearing is set for May 8, 2025, and could reshape expectations around corporate accountability in decentralized finance. For the crypto industry, it’s a clear warning: innovation won’t shield bad actors from the consequences of fraud.
