NEW YORK (AP) — Alexander Mashinsky, the founder and former CEO of the failed cryptocurrency lending platform Celsius Network, has pleaded guilty to federal fraud charges, admitting that he misled customers about the company’s operations. Mashinsky, 58, from Manhattan, entered his plea in a New York federal court on Tuesday to charges of commodities and securities fraud.
Mashinsky’s guilty plea comes after a detailed admission that he manipulated the price of Celsius’s proprietary crypto token, and secretly sold his own tokens at inflated prices, pocketing approximately $48 million before Celsius collapsed into bankruptcy in 2022.
In court, Mashinsky confessed that in 2021, he publicly suggested that Celsius had received regulatory approval for its activities, knowing full well that customers would be falsely reassured by such claims. He also admitted to selling the crypto tokens in 2019 while publicly stating that he was not doing so, fully aware that his customers would be misled by these statements.
“I accept full responsibility for my actions,” Mashinsky told the court. He acknowledged that the fraudulent activities took place between 2018 and 2022, during which time Celsius presented itself as a secure platform where users could safely deposit their crypto assets and earn interest, much like a traditional bank.
U.S. Attorney Damian Williams stated in a press release that Mashinsky “orchestrated one of the biggest frauds in the crypto industry,” as Celsius’s assets were once valued at approximately $25 billion, making it one of the largest platforms in the global cryptocurrency market. According to prosecutors, Mashinsky used catchy slogans like “Unbank Yourself” to lure customers, promising that their crypto assets would be as safe as money deposited in a conventional bank.
However, while customers were led to believe their investments were secure, Mashinsky and his co-conspirators were using customer deposits to artificially inflate the value of the Celsius token. Mashinsky made tens of millions of dollars by selling his own CEL tokens at inflated prices, leaving his customers “holding the bag” when the company ultimately filed for bankruptcy.
The indictment revealed that Mashinsky promoted Celsius through media interviews, his personal social media accounts, and the company’s website. He also held a weekly “Ask Mashinsky Anything” session, which was broadcast on Celsius’s website and a YouTube channel. Despite several employees raising concerns about false and misleading statements during these sessions, Mashinsky ignored the warnings, according to the indictment.
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As part of a plea agreement with prosecutors, Mashinsky faces a potential sentence of up to 30 years in prison and is required to forfeit the $48 million he allegedly gained from the sale of Celsius tokens at artificially high prices.
This case highlights the ongoing scrutiny of the cryptocurrency industry, which has faced growing concerns over regulatory oversight, consumer protection, and the stability of crypto assets. Celsius Network’s collapse has been one of the most significant failures in the crypto space, leaving thousands of investors with substantial losses.
Mashinsky’s guilty plea marks a pivotal moment in the broader effort to hold crypto industry leaders accountable for fraudulent practices. As regulatory bodies continue to grapple with the rapid growth and volatility of cryptocurrencies, Mashinsky’s conviction serves as a cautionary tale for both investors and entrepreneurs operating in this emerging and often unregulated sector.
