TLDR
Alex Mashinsky, former Celsius CEO, faces sentencing after pleading guilty to commodities fraud and price manipulation
DOJ requests 20-year prison sentence while Mashinsky’s lawyers argue for 366 days
Mashinsky earned $48 million selling CEL tokens before Celsius collapsed in June 2022
Hundreds of victims submitted impact statements detailing financial losses
Celsius paid $2.53 billion to 251,000 creditors in August 2024 following bankruptcy
Alex Mashinsky, the founder and former CEO of bankrupt crypto lending platform Celsius, awaits sentencing on May 8 for his role in misleading users and manipulating the price of the platform’s token. The 59-year-old pleaded guilty in December 2024 to commodities fraud and manipulating the price of CEL, which earned him $48 million by selling his holdings before Celsius collapsed.
The US Department of Justice has requested Mashinsky receive at least 20 years behind bars. This would mean the former executive would be 79 years old upon release if he serves the full sentence.
Mashinsky’s legal team filed a reply memorandum in a New York district court arguing he should receive no more than 366 days in prison. They claim the DOJ hasn’t considered his status as a nonviolent first-time offender with a previously clean 30-year business history.
“The government’s venom-laced submission recasts this case as one involving a predator with an intent to target victims, harm them, and steal their money,” his lawyers stated in the May 5 filing.
Victim Impact
Federal prosecutors filed statements from hundreds of victims who lost money due to the Celsius collapse. These statements detail how many users had entrusted their life savings to the protocol, believing Mashinsky’s assurances that it was safe.
“Many of the people who participated in this fraud, benefited from this fraud, and potentially orchestrated this fraud will get away with zero legal consequences,” said Daniel Frishberg of Florida in an April 24 statement. “Please do not allow Mr. Mashinsky to be one of those people. Please throw the book at him.”
Not all victim statements called for harsh punishment. One user, Artur Abreu, suggested some leniency, noting that “despite his mistakes, Mr. Mashinsky was, at times, the more conservative voice in an industry overflowing with unchecked greed.”
Web3 Deep Dive podcast host Rachel Wolfson, who lost access to Bitcoin worth about $5,000 at the time of the collapse, supported the DOJ’s request. “The twenty-year sentence suggested by the US DOJ is fair in my opinion, as Mashinsky caused pain and suffering for many crypto investors across the globe – even resulting in suicide for some of those involved,” Wolfson stated.
Legal Proceedings
Mashinsky originally faced seven charges filed by prosecutors in July 2023. As part of a plea agreement, he pleaded guilty to two counts: commodities fraud and manipulating the price of CEL.
His legal team alleges the DOJ’s push for a 20-year sentence stems from Mashinsky’s unwillingness to “capitulate to the government’s exaggerated characterizations of his actions,” particularly the claim that he was a “fraud from the get-go.”
“Alex is inserted as the scapegoat for every corporate action, every group decision, every unanimous vote, every market fluctuation, and every employee’s watercooler speculation,” his lawyers argued.
The DOJ countered in its April 28 sentencing request, stating that Mashinsky’s guilty plea showed his crimes were “deliberate, calculated decisions to lie, deceive and steal.”
Celsius filed for Chapter 11 bankruptcy on July 13, 2022, owing $4.7 billion to creditors. This came after the company halted withdrawals in June, citing volatile market conditions.
In November 2023, a US bankruptcy court approved Celsius’ restructuring plan to repay customers. By August 2024, $2.53 billion had been paid to 251,000 creditors.
Former Celsius chief revenue officer Roni Cohen-Pavon also pleaded guilty in September 2023 to similar charges. His sentencing, originally scheduled for December 11, has been delayed until after Mashinsky is sentenced.
Mashinsky’s sentencing will be one of the first major crypto cases in the district since Jay Clayton became interim US Attorney for the Southern District of New York. Clayton previously served as chair of the SEC and has been seen as a crypto proponent on many issues.
The sentencing decision on May 8 will be watched closely by the crypto community as it may set precedent for how similar cases are handled in the future.
The post Former Celsius CEO Mashinsky Awaits Sentencing for Crypto Fraud Charges appeared first on Blockonomi.
