According to ShibDaily, the U.S. Department of Justice (DOJ) has recommended a 20-year prison sentence for Alex Mashinsky, the former CEO of the now-defunct cryptocurrency platform Celsius. This recommendation follows Mashinsky's involvement in a significant fraud scheme that led to Celsius users losing access to approximately $4.7 billion in crypto assets. The platform ceased withdrawals on June 12, 2022, marking the beginning of its collapse, with Mashinsky's actions being a central factor in the financial difficulties faced by its users.
In a sentencing memorandum dated April 28, the U.S. government highlighted Mashinsky's fraudulent activities, which not only resulted in substantial losses for investors but also allowed him to personally profit. In December 2024, Mashinsky pleaded guilty, admitting to his role in the scheme that caused $550 million in losses for investors and earned him $48 million in personal gains. The memorandum detailed how Celsius declared bankruptcy in 2022, revealing that the company could not return customer deposits. It was discovered that Mashinsky had misrepresented the company's operations, falsely claimed profitability, and exposed customer funds to uncollateralized loans and undisclosed market bets, contrary to his assurances to customers.
The DOJ further uncovered that Celsius engaged in risky lending practices, speculative investments, and used customer funds to artificially inflate the value of its native token, CEL. Mashinsky's actions included manipulating the price of CEL, creating a false impression of demand, and enabling him to profit by selling his CEL tokens at inflated prices. The DOJ argued that Mashinsky's deliberate criminal conduct and lack of remorse justify a severe sentence. The department emphasized that a lengthy prison term is necessary to reflect the seriousness of his crimes, uphold the law, ensure appropriate punishment, and deter others from engaging in similar fraudulent activities.