Alex Mashinsky, founder of Celsius Network, pleaded guilty to fraud charges involving the manipulation of the CEL token and misleading investors.
Background
- Mashinsky, 59, admitted to two counts of fraud: commodities fraud and manipulating Celsius’ native CEL token
- Federal prosecutors indicted Mashinsky in July 2023 on seven charges, accusing him of misleading customers about Celsius’ "Earn" program and inflating the value of CEL
- In court, Mashinsky confessed to providing false information to customers, including claims that Celsius’ "Earn" program had regulatory approval, which it had not received
- Mashinsky also admitted that he failed to disclose his personal sales of CEL tokens while inflating its value, profiting approximately $42 million before Celsius filed for bankruptcy in 2022
- As part of his plea deal, Mashinsky faces a maximum of 30 years in prison and has waived the right to appeal any sentence within that range
- Sentencing is scheduled for April 8, 2025
Why should you pay attention?
- Celsius’ collapse left many customers unable to access their funds, revealing the vulnerabilities in high-yield crypto lending schemes
- Mashinsky’s guilty plea serves as a precedent, emphasizing the legal consequences for executives in the crypto industry who engage in fraudulent practices
- The fallout from Celsius’ bankruptcy highlights the risks of investing in platforms that promise high returns without sufficient transparency
Who said what?
- US Attorney Damian Williams stated,
"Mashinsky made tens of millions of dollars selling his own CEL at artificially high prices, while his customers were left holding the bag when the company went bankrupt"
- During his plea, Mashinsky admitted,
"I know what I did was wrong, and I want to try to do whatever I can to make it right"
- Mashinsky’s defense lawyer Marc Mukasey commented,
"Sometimes, accepting responsibility when and where appropriate is the best way to help everybody move on"
Zooming out
- Founded in 2017, Celsius Network was once a prominent crypto lender, offering high interest rates to depositors and loans to institutional investors
- The company filed for bankruptcy in 2022 after a rush of withdrawals during the crypto market downturn, leaving many customers stranded
- Celsius has since pivoted to Bitcoin mining, but its legacy is marred by its collapse and legal fallout
