
NEW YORK, NY —
Alex Mashinsky, the founder and former CEO of the now-defunct crypto lending platform Celsius Network, was sentenced to 12 years in prison for fraud on Thursday.
Judge John Koeltl of the Southern District of New York delivered the sentence, which combines a 120-month term to be served concurrently with a separate 144-month term stemming from the two charges Mashinsky admitted guilt to. This ruling illustrates the gravity of his actions, as Mashinsky faces significant consequences for his misconduct.
Mashinsky was ordered to forfeit $48 million along with several real estate assets. “No matter what the sentence, the sentence will not cure the monetary or psychological harm caused to the victims,” Koeltl expressed.
Before Celsius’ bankruptcy in 2022, Mashinsky consistently misled investors regarding the security of their deposits. He falsely claimed regulatory approval for Celsius’s operations and assured investors that the platform did not engage in uncollateralized loans, which it actually did. Prosecutors asserted that he made over $48 million solely from trading CEL tokens, as his poor leadership led to a staggering $1.2 billion shortfall on the company’s balance sheet — a number that could escalate to $7 billion considering current values.
Following Celsius’ decline, more than 100,000 creditors reported losing a total of $4.7 billion, according to initial bankruptcy filings.
In a statement, U.S. Attorney Jay Clayton commented, “Alexander Mashinsky targeted retail investors with promises that he would keep their ‘digital assets’ safer than a bank. In the end, Mashinsky made tens of millions of dollars while his customers lost billions. America’s investors deserve better.”
Mashinsky’s defense team attempted to mitigate his culpability in court, claiming he does not harbor malicious intent and that the allegations against him were exaggerated.
During the hearing, Mashinsky displayed emotional distress, particularly when addressing the victims of his fraud. He stated, “As someone who came from nothing, I recognize how hard people work to earn, save and invest in crypto. I respectfully ask the victims for forgiveness and I apologize to all of them for my mistakes. I’m truly sorry.”
Numerous victims provided personal accounts of the hardships they faced due to Celsius’ downfall. One victim, Cameron Crewes, claimed that the defense’s characterization of Mashinsky was a “horrific minimization” of the damage caused.
Victory against such deceitful practices remains elusive as many victims continue to seek accountability for the losses inflicted by Mashinsky’s actions. As part of his plea agreement, Mashinsky cannot contest his sentence, which he is expected to begin serving in September at FCI Otisville, a medium-security facility in New York. If Mashinsky completes his entire sentence, he will be 72 years old upon release.