Alexander Mashinsky, the former CEO and founder of the now-defunct cryptocurrency lending platform Celsius Network, has pleaded guilty to federal fraud charges, acknowledging that he misled customers regarding the financial stability of his company and manipulated the value of its proprietary token, CEL. This plea, entered in a New York federal court, signifies a pivotal moment in one of the largest scandals to hit the cryptocurrency industry.
Mashinsky, 58, admitted to charges of commodities and securities fraud as part of a multi-year scheme designed to artificially inflate the value of Celsius’ native cryptocurrency. Prosecutors allege that he sold off his holdings at inflated prices while deceiving investors about the company’s health. It is estimated that Mashinsky profited approximately $48 million before Celsius filed for bankruptcy in 2022, following a liquidity crisis triggered by overwhelming customer withdrawal requests.
In court, Mashinsky stated, “I accept full responsibility for my actions,” recognizing his role in misleading both investors and customers. His fraudulent activities spanned from 2018 to 2022, during which Celsius marketed itself as a “safe” alternative to traditional banking, offering high-interest returns on crypto deposits. At its peak, Celsius claimed to manage around $25 billion in assets, positioning itself as one of the largest and most trusted platforms in the cryptocurrency space.
Under Mashinsky’s leadership, Celsius rapidly expanded its user base by promoting the slogan “Unbank Yourself,” appealing to retail investors seeking higher returns on their digital assets. However, as the company grew, it became evident that it was operating on precarious foundations marked by mismanagement and risky investments.
Prosecutors have accused Mashinsky of manipulating the price of CEL by using customer deposits to purchase the token on the open market, artificially sustaining its value while selling off his personal holdings at these inflated prices. Despite Celsius’s financial struggles, Mashinsky continued to assure investors that the company was secure and had regulatory approval for its operations.
“Alexander Mashinsky orchestrated one of the biggest frauds in the crypto industry,” stated U.S. Attorney Damian Williams. “He lured ordinary retail crypto investors into investing billions of dollars in Celsius with false promises that their investments were low-risk.” The collapse of Celsius left thousands of customers unable to access their funds or withdraw their crypto holdings, leading to widespread financial distress and contributing to a loss of trust in the broader cryptocurrency market.
As part of a plea agreement, Mashinsky faces a potential sentence of up to 30 years in prison, with sentencing scheduled for April 8, 2025. He may receive a reduced sentence if he cooperates with authorities. Additionally, he will be required to forfeit over $48 million—the amount he allegedly gained from illegal CEL token sales.
Mashinsky’s legal challenges are not limited to criminal charges; he is also facing civil lawsuits from both the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). These lawsuits accuse him and Celsius of raising billions through fraudulent crypto sales and misleading investors about the company’s financial health. The SEC claims that under Mashinsky’s leadership, Celsius engaged in unregistered securities offerings and made false statements to customers and the public.
