Alex Mashinsky, the former CEO and co-founder of Celsius Network, has pleaded guilty to two counts of fraud.
This is yet another significant case emerging from the wreckage of the 2022 cryptocurrency market crash.
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Mashinsky is facing serious allegations, including commodities fraud and a scheme to manipulate the price of CEL, Celsius’s own token.
He admitted to artificially inflating the value of CEL, which allowed him to pocket $42 million.
But that’s not all. Mashinsky also misled customers into thinking that the “Earn” program at Celsius had received regulatory approval, which it hadn’t.
This program promised investment returns on crypto deposits, but it was all smoke and mirrors.
To make matters worse, he hid his own sale of CEL holdings while promoting the token to others.
Plea deal and sentencing
Initially facing seven counts, Mashinsky struck a plea deal with federal prosecutors in Manhattan.
Now, he’s looking at up to 30 years in prison for his actions, and U.S. District Judge John Koeltl is set to hand down his sentence on April 8, 2025.
This isn’t the first guilty plea in this story, because Roni Cohen-Pavon, Celsius’s former chief revenue officer, also pleaded guilty last year and is cooperating with investigators.
Fallout
Celsius burst onto the scene as a promising crypto lender in 2017, luring depositors with promises of high returns by lending digital assets to institutional investors, but when crypto prices plummeted, it triggered a wave of withdrawals that left many customers locked out of their funds.
The company filed for bankruptcy in July 2022 but managed to emerge from it at the beginning of 2023, shifting its focus to Bitcoin mining.
This case is just one example of the increasing crackdown on cryptocurrency fraud following the market collapse in 2022.
That year saw other high-profile failures like FTX and Three Arrows Capital also file for bankruptcy.
In 2024, FTX founder Sam Bankman-Fried also was convicted of fraud and sentenced to 25 years in prison.
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