Alex Mashinsky, founder and former CEO of Celsius Network, has been sentenced to 12 years in prison for his role in defrauding customers of the crypto lending platform.
Mashinsky pleaded guilty to securities and commodities fraud charges in December 2024. The sentence was handed down by U.S. District Judge John Koeltl in Manhattan federal court on May 8, 2025.
Background:
Celsius Network, founded by Mashinsky in 2017, allowed users to deposit cryptocurrency and earn interest, positioning itself as a secure alternative to traditional banks. At its peak, the platform managed over $20 billion in assets.
However, in June 2022, Celsius froze customer withdrawals, citing a downturn in the crypto market. The company filed for bankruptcy a month later, revealing a $1 billion shortfall.
Fraudulent Actions:
Mashinsky falsely advertised Celsius as a secure investment platform, concealing its financial difficulties and misleading clients about the platform’s stability.
He made false claims that Celsius’s CEL token was SEC-registered and manipulated its price, profiting $48 million in the process. This left many investors unable to withdraw their funds.
Legal Consequences:
Mashinsky was arrested in July 2023 and faced charges of securities, commodities, wire fraud, and market manipulation.
As part of his guilty plea, he agreed to forfeit $48 million. Although prosecutors initially sought a 20-year sentence, Judge Koeltl imposed a 12-year term, considering Mashinsky’s actions as “unrepentant.”
Broader Impact:
The collapse of Celsius Network and the ensuing fraud case highlight the risks associated with unregulated crypto platforms. The event prompted renewed calls for increased regulation in the crypto industry to protect investors.
Affected users are encouraged to consult legal professionals regarding potential recovery options.
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