The founder and former CEO of bankrupt cryptocurrency lender Celsius Network has been sentenced to 12 years in prison on fraud charges, the Department of Justice (DOJ) said on May 8.
Alexander Mashinsky, 59, of New York, was sentenced by U.S. District Judge John G. Koeltl on May 8 after pleading guilty in December 2024 to commodities fraud and securities fraud.
Prosecutors stated that Mashinsky had misled customers about Celsius’s proprietary crypto token CEL and artificially inflated its value by buying it on the open market. This manipulation allowed him to profit about $48 million from his own sales of CEL.
U.S. Attorney Jay Clayton said that Mashinsky targeted retail investors with promises that their investments were safe on Celsius, while in reality, he used those funds for risky bets.
Mashinsky made tens of millions selling his own CEL tokens “while his customers lost billions,” Clayton added.
“America’s investors deserve better,” Clayton said in a statement. “The case for tokenization and the use of digital assets is strong, but it is not a license to deceive.”
Lawyers for Mashinsky were not immediately available to comment.
Celsius was a global cryptocurrency platform that offered investment returns for asset deposits, secured loans, and custody services. The company filed for Chapter 11 bankruptcy in July 2022.
At the sentencing hearing, Assistant U.S. Attorney Allison Nichols cast Mashinsky as a financial predator, saying that he had deceived customers from the start by exaggerating Celsius’s ability to build momentum.
“He preyed on hope,” Nichols told the judge, noting that the customers were not going to be made financially whole regardless of the money that could be recovered through bankruptcy proceedings.
The defense blamed the collapse of Celsius on a “cataclysmic downturn” of cryptocurrency markets in May and June of 2022 and said in court papers that Mashinsky’s actions were “never predatory, exploitative, or venal.”
According to the DOJ statement, Mashinsky allegedly deceived customers about Celsius’s financial position and secretly withdrew $8 million worth of his own non-CEL assets from the company before it collapsed.
Hundreds of thousands of Celsius users were left without access to about $4.7 billion in digital assets when the company finally announced that it was halting customer withdrawals in June 2022.
Cameron Crewes, who served on a victims’ committee, has called for a “harsh” sentence. Crewes said during the sentencing hearing that hundreds of victims have died before they could see justice served.
