Alex Mashinsky, the founder and former CEO of cryptocurrency lender Celsius Network, pleaded guilty on Tuesday to two counts of fraud, admitting to deceiving customers and manipulating the price of the company’s proprietary token. The plea comes amid increased scrutiny of the cryptocurrency industry following the collapse of multiple high-profile firms.
Admission of Guilt in Federal Court
Mashinsky, 59, appeared before U.S. District Judge John Koeltl in Manhattan, where he admitted to commodities fraud and engaging in a scheme to manipulate the price of CEL, Celsius’ in-house cryptocurrency token. Initially indicted in July 2023 on seven counts of fraud, conspiracy, and market manipulation, Mashinsky’s guilty plea to two charges was part of a deal with federal prosecutors.
In court, Mashinsky acknowledged misleading Celsius customers by falsely claiming in a 2021 interview that the company’s “Earn” program had regulatory approval. He also admitted to concealing his personal sales of CEL tokens, actions that inflated the token’s value while leaving customers vulnerable.
“I know what I did was wrong, and I want to try to do whatever I can to make it right,” Mashinsky said during the hearing.
Sentencing and Plea Agreement
Under the plea agreement, Mashinsky will not appeal any sentence of 30 years or less. Sentencing is scheduled for April 8, 2025. Federal prosecutors revealed that Mashinsky personally profited approximately $42 million from selling his CEL holdings at inflated prices.
“Mashinsky made tens of millions of dollars selling his own CEL at artificially high prices, while his customers were left holding the bag when the company went bankrupt,” U.S. Attorney Damian Williams said in a statement.
Mashinsky’s trial, initially set for January 2024, has been canceled following his guilty plea.
Celsius’ Collapse and the Crypto Industry Fallout
Founded in 2017, Celsius Network was once a prominent crypto lender, promising depositors high returns while lending out their digital assets. The company filed for Chapter 11 bankruptcy in July 2022 after a sharp decline in crypto prices led to a rush of customer withdrawals. Many customers were initially unable to access their funds.
Celsius exited bankruptcy in January 2023 and has since shifted its focus to Bitcoin mining. However, the collapse of the platform highlighted vulnerabilities in the crypto lending sector, which grew rapidly during the pandemic as crypto prices soared.
