May 9 (UPI) — Alexander Mashinsky, the founder and former CEO of the Celsius cryptocurrency platform and Bitcoin mining company, was sentenced to 12 years in prison on counts related to commodities and securities fraud.
The U.S. Attorney for the Southern District of New York Jay Clayton announced the sentence for Mashinsky in a press release Thursday.
“Mashinsky targeted retail investors with promises that he would keep their ‘digital assets’ safer than a bank, when in fact he used those assets to place risky bets and to line his own pockets,” Clayton said.
Mashinsky managed to make tens of millions of dollars “while his customers lost billions.”
Via his Celsius crypto asset platform, Mashinsky offered customers “rewards” on deposited assets, secured loans, and custody services and persuaded customers to “unbank” themselves by transferring their crypto assets to his platform.
Celsius’ primary “Earn” offering promised to employ customer assets to generate investment returns.
Celsius also offered “Custody” and “Borrow” programs, the latter of which allowed customers to get loans by posting their crypto assets as collateral.
Mashinsky marketed Celsius to retail customers globally and frequently misrepresented key aspects of Celsius’ business and finances in order to attract customers and then retain their assets.
His false claims covered the yield-generating activities of Celsius, and its profitability, the sustainability of high reward rates and the risks connected with depositing crypto assets on the platform. As Mashinsky portrayed Celsius as secure, the platform grew exponentially, and by autumn of 2021, Celsius had become one of the biggest crypto platforms in the world, holding as much as $25 billion in assets at one point.
Mashinsky worked with others to orchestrate a scheme to mislead clients about Celsius’ proprietary crypto token CEL. They manipulated CEL’s price by spending hundreds of millions to buy it on the open market in order to artificially inflate its value, occasionally even with customer deposits with the customers’ knowledge.
Mashinsky then frequently made false public statements about Celsius’ market activity and its role in supporting and inflating CEL’s. At some points, Mashinsky and other executives personally bought CEL to falsely support its value. The artificial price inflation allowed Mashinsky to make around $48 million in profits from his own sales of CEL
Mashinsky kept on assuring customers of Celsius’ strong financial position and liquidity but withdrew $8 million of his own non-CEL assets from Celsius. When Celsius announced it was halting customer withdrawals in June of 2022, hundreds of thousands of Celsius customers had $4.7 billion in unavailable assets on the platform. Celsius then filed for bankruptcy in July of 2022.
Mashinsky had previously pleaded guilty in December of 2024. He’s also been sentenced to three years of supervised release, to pay a fine of $50,000 and forfeit more than $48 million.
