NEW YORK — The former CEO and founder of Celsius Network, a now-defunct cryptocurrency lending service, may face severe legal consequences, including potential decades behind bars, after he entered a guilty plea to federal fraud charges on Tuesday. Alexander Mashinsky, 58, from Manhattan, pleaded guilty in a New York federal court to charges of commodities and securities fraud.
During the court proceedings, Mashinsky acknowledged that he had engaged in illegal activities that involved manipulating the price of the company’s proprietary cryptocurrency token. He admitted to profiting approximately $48 million by selling his own tokens at artificially inflated prices prior to the company’s bankruptcy in 2022.
In his statements, he confessed that in 2021, he misled customers by implying that the company had regulatory backing for its actions, affirming that he understood this would provide customers “false comfort.” Furthermore, he expressed that he was deceptive in 2019, proclaiming he was not selling any crypto tokens, despite the fact that he was, knowing it would mislead clients again.
“I accept full responsibility for my actions,” Mashinsky remarked regarding the fraudulent activities that transpired between 2018 and 2022 while Celsius presented itself to clients as a reliable institution where they could securely deposit their crypto assets and earn interest.
U.S. Attorney Damian Williams elaborated on Mashinsky’s role in a press release, characterizing him as the mastermind behind one of the largest frauds in the cryptocurrency sector, noting that his company’s assets had surged to approximately $25 billion at its peak, establishing it as one of the biggest platforms in the crypto market.
Mashinsky utilized appealing slogans such as “Unbank Yourself” to attract new customers, assuring them that their funds would enjoy the same level of safety as those held in traditional banks. Meanwhile, according to prosecutors, he and his accomplices misappropriated customer deposits to purchase Celsius tokens to inflate their market value.
Williams highlighted that Mashinsky earned tens of millions by selling CEL tokens at inflated prices, ultimately leaving customers at a loss when the company deteriorated.
The indictment revealed that Mashinsky actively promoted Celsius through various media outlets, his social media platforms, and the company’s website. He hosted a weekly “Ask Mashinsky Anything” session that further publicized the brand, which was also shared on a dedicated YouTube channel.
Despite warnings from employees across different departments regarding misleading statements made during these sessions, Mashinsky chose to disregard their concerns, as stated in the indictment.
As part of a plea agreement with prosecutors, Mashinsky faced a sentencing outcome of up to 30 years in prison and was required to forfeit more than $48 million, equating to his illicit earnings from the sale of the CEL token.
The sentencing hearing has been set for April 8.