What You Should Know:
- Alex Mashinsky, once at the helm of Celsius Network, could face a 20-year prison sentence due to orchestrating a fraud that led to nearly $7 billion in losses for customers.
- He admitted to misleading clients about the security of their deposits and using the CEL token for personal gain.
- Sentencing is scheduled for May 8, as prosecutors stress the need for a severe penalty to deter future misconduct in the crypto sector.
Alex Mashinsky, the founder of the defunct crypto lender Celsius Network, is in danger of spending two decades behind bars if the U.S. Department of Justice’s sentencing memo request is approved. In the memo submitted late Monday, prosecutors asked for a 20-year sentence, characterizing Mashinsky’s actions as a deliberate fraud that cost customers nearly $7 billion, leaving thousands financially ruined.
Mashinsky has pleaded guilty to charges including misleading customers about the safety of their funds while manipulating the CEL token. The memo states that his actions were calculated, rather than negligent or unlucky.
At its peak in 2021, Celsius oversaw over $20 billion in customer assets, aggressively marketing itself as a secure alternative to traditional banks, offering high yields and low risk. However, these claims were false, as the firm took uncollateralized loans and made risky trades all while assuring clients their investments were secure.
After changes in crypto prices following the 2024 rally, the total estimated loss is now around $7 billion. Prosecutors insist that a light sentence would undermine the seriousness of Mashinsky’s actions and could diminish legal standards for crypto executives.
Judge John G. Koeltl is set to deliver Mashinsky’s sentence on May 8.
