Alex Mashinsky, Founder of Celsius Network, Sentenced to 12 Years for Crypto Fraud
Alex Mashinsky, the founder and former CEO of Celsius Network, has been sentenced to 12 years in federal prison for securities and commodities fraud. The sentencing, delivered by U.S. District Judge John Koeltl in New York, follows Mashinsky’s guilty plea to two counts in December 2024. He admitted to misleading customers about Celsius’s operations and manipulating the price of the company’s proprietary cryptocurrency token, CEL, for personal gain.
Celsius Network, once a prominent crypto lending platform managing over $25 billion in assets, collapsed in 2022 amid a broader cryptocurrency market downturn. The company’s bankruptcy left approximately $4.7 billion in customer funds trapped, with only about 60% recovered to date.
Prosecutors highlighted that Mashinsky personally profited by over $45 million through the sale of CEL tokens, funds he used for personal luxuries. Despite his defense team’s request for a lenient one-year sentence, citing mitigating factors, the court imposed a 12-year term, emphasizing the deliberate and deceptive nature of his actions and his lack of remorse.
In addition to the prison sentence, Mashinsky was ordered to forfeit $48 million and will face three years of supervised release. He also faces ongoing civil lawsuits from various U.S. regulatory bodies, including the Securities and Exchange Commission (SEC) and the Federal Trade Commission (FTC).
Mashinsky’s case underscores the federal government’s commitment to prosecuting fraud in the cryptocurrency industry, paralleling other high-profile cases like that of FTX’s Sam Bankman-Fried.
The sentencing of Alex Mashinsky marks a significant moment in the crackdown on fraudulent activities within the cryptocurrency sector. As Celsius Network’s collapse left thousands of investors facing heavy financial losses, the verdict has been seen as a measure of justice for affected parties.
During the trial, several victims testified about their financial hardships, including loss of savings and investments they had entrusted to Celsius. The prosecution emphasized that Mashinsky’s actions not only violated financial regulations but also shattered the trust of everyday investors who believed in the platform’s promises of high returns and stability.
Regulatory authorities, including the SEC and FTC, continue to pursue civil actions against Mashinsky and other former executives of Celsius Network. These cases aim to further address the financial damages caused and ensure that any remaining assets are used to compensate the affected customers.
The court’s decision also reflects a broader stance by U.S. authorities to hold crypto executives accountable for misleading investors and manipulating digital asset prices. Legal analysts suggest that Mashinsky’s sentencing could set a precedent for other ongoing cases in the cryptocurrency industry, reinforcing the message that fraudulent practices in the crypto space will not go unpunished.
