In New York, prosecutors recommended a sentence of 20 years for Alexander Mashinsky, the founder and ex-CEO of the now-bankrupt cryptocurrency lending service, Celsius Network. They argue that Mashinsky’s deceitful practices led to significant financial losses, amounting to billions for his clients. Mashinsky, aged 59, falsely assured thousands of customers about the safety of their investments, which inspired over $20 billion being channeled into Celsius by 2021.
According to prosecution documents submitted before Mashinsky’s sentencing scheduled in May, the reality was quite the opposite. By 2022, Celsius filed for bankruptcy, admitting its inability to return customer investments. Mashinsky is accused of exaggerating the company’s profits and jeopardizing client assets through precarious loans and undisclosed high-risk market endeavors while falsely promoting the company as a secure modern banking alternative for cryptocurrency deposits.
Prosecutors highlighted Mashinsky’s substantial financial gain from these fraudulent activities. In response, Mashinsky’s defense team has requested a significantly lighter sentence of just over a year. They argue that the company’s downfall was mainly due to a dramatic downturn in the cryptocurrency market in mid-2022.
Mashinsky’s lawyers contended that he did not act with malice, nor did he intend to defraud or financially exploit anyone for personal gain. They emphasized that he has no history of greed or deceitful behavior, arguing that external market forces led to the company’s collapse.
Addressing Mashinsky’s background, the defense highlighted his challenging upbringing in a small Ukrainian town during the Soviet era until his family relocated to Israel. There, Mashinsky fulfilled military service in the Israeli Defense Forces. They portrayed him as a responsible family man to six children, pleading for leniency owing to his missteps stemming from “legitimate efforts” that unfortunately evolved into unlawful activities.
At his plea hearing, Mashinsky confessed to dishonest practices, including manipulating the value of Celsius’ proprietary crypto token while secretly selling his tokens at enhanced market rates, amassing nearly $48 million. He acknowledged misguiding the public by implying regulatory compliance to falsely reassure customers.
Charges against Mashinsky detail aggressive promotional efforts through media, social media platforms, and Celsius’ website. Furthermore, he engaged with the public through a weekly segment titled “Ask Mashinsky Anything,” which featured on the company’s site and a dedicated YouTube channel.