Alexander Mashinsky, the former CEO of crypto firm Celsius Network, has been sentenced to 12 years in prison for commodities fraud and securities fraud.
Mashinsky pled guilty in December for his role in a scheme to defraud investors. Celsius operated a crypto asset platform offering customers “rewards” on deposited assets, secured loans, and custody services, marketing itself as the “safest place for your crypto.” The firm encouraged customers to “unbank” themselves by transferring their crypto assets to its platform.
By late 2021, Celsius had become one of the largest crypto platforms globally, holding around $25 billion in assets at its peak. However, prosecutors allege that Mashinsky orchestrated a years-long scheme to mislead customers about Celsius’s proprietary crypto token, CEL. He manipulated its price by spending hundreds of millions to purchase it on the open market, artificially inflating its value, sometimes using customer funds without disclosure.
Despite publicly claiming he was not selling CEL, he profited approximately $48 million from these transactions. In June 2022, Celsius halted customer withdrawals, leaving hundreds of thousands unable to access $4.7 billion on the platform, and subsequently filed for bankruptcy the following month.
US Attorney Jay Clayton stated: “Alexander Mashinsky targeted retail investors with promises that he would keep their digital assets safer than a bank, when in fact he used those assets to place risky bets and line his own pockets. In the end, Mashinsky made tens of millions of dollars while his customers lost billions.”
Mashinsky now joins other crypto executives, such as FTX founder Sam Bankman-Fried and Binance’s Changpeng Zhao, in facing prison time.