Alex Mashinsky, ex The CEO of bankrupt crypto lender Celsius, ha pleaded guilty to two crimes of fraud, which together carry a maximum sentence of 30 years in prison.
Following the company’s collapse, the US Department of Justice charged Mashinsky with seven counts of fraud, conspiracy and market manipulation. After originally pleading not guilty, he was due to face a criminal trial in the Southern District of New York in January.
However, at a court hearing on Tuesday, Mashinsky pleaded guilty to one count of commodity fraud and one count of securities fraud. Mashinsky has admitted to lying to Celsius clients about fundamental aspects of the business, including how their funds would be used, the DOJ says, as well as manipulating the price of a proprietary crypto token for his personal financial gain.
As part of the plea agreement, Mashinksky has agreed to forfeit $48 million in ill-gotten gains. He will be sentenced on April 8, 2025.
“Alexander Mashinsky orchestrated one of the largest frauds in the crypto industry,” US Attorney Damian Williams said in a statement. “Today’s sentencing reflects this Office’s commitment to holding fraudsters like Mashinsky accountable for their crimes.”
Founded by Mashinsky in 2017, Celsius marketed itself as a new-age alternative to traditional banks, as the “safest place for your crypto,” the DOJ claims.
The company took crypto deposits, which it invested or lent out to fund interest payments to customers. People were lured by promises of interest of up to 17 percent on deposits, dozens of times higher than the rate offered by banks at the time. At its peak, Celsius held more than $25 billion in client assets, the DOJ claims.
However, in May 2022, things went south. The collapse of Terra Luna’s stablecoin simultaneously blew a billion dollar hole to Celsius’ balance sheet and, as crypto prices plummeted, sent panicked customers rushing to withdraw billions of dollars in crypto from their Celsius accounts. After its investments in Terra Luna and other assets he became bitterthe company no longer had the funds to pay and was eventually forced to suspend withdrawals. In July of that year, Celsius declared bankruptcytrapping $4.7 billion of their clients’ funds.
