Additional Coverage:
Former Celsius CEO Alexander Mashinsky Sentenced to 12 Years for Fraud
New York, NY – Alexander Mashinsky, who founded and led the cryptocurrency platform Celsius, has been sentenced to 12 years in prison for orchestrating a massive fraud scheme. The sentence, handed down by the U.S. Attorney for the Southern District of New York, follows Mashinsky’s guilty plea on charges related to commodities and securities fraud.
U.S. Attorney Jay Clayton stated that Mashinsky lured retail investors with false promises of security, claiming their digital assets would be safer with Celsius than in a traditional bank.
Instead, Mashinsky used those assets for risky ventures and personal enrichment. While customers collectively lost billions of dollars, Mashinsky profited to the tune of tens of millions.
Mashinsky’s scheme involved enticing customers with various programs offering high-yield returns, loans, and custodial services, urging them to abandon traditional banking and entrust their crypto assets to Celsius. He repeatedly misrepresented the company’s financial health, the sustainability of its high reward rates, and the risks associated with its platform. As a result, Celsius grew rapidly, amassing up to $25 billion in assets by the fall of 2021.
The fraud also extended to manipulating the price of Celsius’s own cryptocurrency token, CEL. Mashinsky and others artificially inflated CEL’s value by spending hundreds of millions of dollars to purchase it on the open market, sometimes even using customer deposits without their knowledge. Mashinsky then publicly misrepresented Celsius’s market activity and his own role in supporting CEL, personally profiting approximately $48 million from his own CEL sales.
Even as Celsius faced increasing financial difficulties, Mashinsky continued to reassure customers of the platform’s stability while simultaneously withdrawing $8 million of his own assets. The scheme ultimately collapsed in June 2022 when Celsius halted customer withdrawals, leaving hundreds of thousands of customers with $4.7 billion locked on the platform. Celsius filed for bankruptcy the following month.
In addition to the 12-year prison sentence, Mashinsky received three years of supervised release, a $50,000 fine, and a forfeiture order exceeding $48 million.