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Alexander Mashinsky, the former CEO and founder of the failed cryptocurrency lending platform Celsius Network, has pleaded guilty to federal fraud charges, admitting that he misled customers about the health of his company and manipulated the value of its proprietary token, Reuters reported on Tuesday.
His guilty plea comes after years of legal proceedings and marks a significant moment in one of the largest scandals in the cryptocurrency industry.
Mashinsky, 58, entered the plea in a New York federal court, admitting to charges of commodities and securities fraud. Prosecutors claim that Mashinsky orchestrated a multi-year scheme to artificially inflate the value of Celsius’ native cryptocurrency, CEL, while secretly selling off his holdings at inflated prices. Over the course of his actions, Mashinsky allegedly pocketed approximately $48 million before Celsius collapsed in 2022, filing for bankruptcy after customer withdrawals exceeded the company's liquidity.
“I accept full responsibility for my actions,” Mashinsky told the court, acknowledging his role in deceiving both investors and customers. His fraudulent activities spanned from 2018 to 2022, during which Celsius marketed itself as a "safe" alternative to traditional banking, offering users high-interest returns on crypto deposits.
At its peak, Celsius claimed to manage around $25 billion in assets, positioning itself as one of the largest and most trusted crypto platforms in the world. Under Mashinsky’s leadership, the company grew rapidly, leveraging a catchy slogan—“Unbank Yourself”—to attract retail investors seeking higher returns on their digital assets. However, as the company expanded, it became increasingly clear that Celsius was operating on shaky ground, with mismanagement, risky investments, and misleading claims about the profitability of its products.
Jon Reiter
Prosecutors allege that Mashinsky actively manipulated the price of CEL by using customer deposits to purchase the token on the open market, thereby propping up its value. Meanwhile, he sold off his personal holdings at these inflated prices, effectively leaving Celsius’ customers with worthless assets when the company’s financial collapse became inevitable. Mashinsky continued to make false assurances to investors, even as Celsius struggled financially, often claiming that the company had regulatory approval for its operations and that it was a safe place for crypto deposits.
“Alexander Mashinsky orchestrated one of the biggest frauds in the crypto industry,” said US Attorney Damian Williams. “He lured ordinary, retail crypto investors into investing billions of dollars in Celsius with false promises that their investments were low-risk.”
The company’s implosion in 2022 left thousands of customers in financial distress, unable to access their funds or withdraw their crypto holdings. Celsius’ bankruptcy led to a domino effect in the crypto market, further eroding trust in the sector and leading to heightened scrutiny from regulators worldwide.
Legal Consequences and Future Sentencing
As part of a plea agreement, Mashinsky faces a potential sentence of up to 30 years in prison. Sentencing is scheduled for April 8, 2025, although Mashinsky could receive a reduced sentence in exchange for cooperating with authorities. In addition to the prison time, he will be required to forfeit over $48 million—the amount he is alleged to have personally gained from the illegal CEL token sales.
Mashinsky’s legal troubles are far from over. In addition to the criminal charges, he is also facing civil lawsuits from the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). These lawsuits accuse him and Celsius of raising billions of dollars through fraudulent crypto sales and misleading investors about the company's financial health. The SEC claims that Celsius, under Mashinsky's leadership, engaged in unregistered securities offerings and made false statements to customers and the public.
