Alexander Mashinsky Pleads Guilty to Commodities and Securities Fraud in the Collapse of Celsius Network

Alexander Mashinsky, 58, of Manhattan, entered the plea in New York federal court to commodities and securities fraud.

Alexander Mashinsky, 58, pleaded guilty on Friday to commodities and securities fraud for illegally manipulating the price of Celsius’s crypto token while secretly selling his own tokens at inflated prices.

According to the indictment, from at least 2018 to 2022, Mashinsky, the former chief executive of Celsius Network, promoted Celsius through media interviews, his social media accounts and Celsius’ website, along with a weekly “Ask Mashinsky Anything” session broadcast that was posted to Celsius’ website and a YouTube channel.

During these sessions, and in other statements, Mashinsky made false and misleading statements about Celsius's crypto asset lending and borrowing business, the regulatory oversight of Celsius, and the use of customer crypto assets.

Celsius employees from multiple departments who noticed false and misleading statements in the sessions brought them to Mashinsky's attention, but he ignored their concerns, the indictment said.

The indictment further alleges that, in 2021, Mashinsky knew that customers would find false comfort if they believed there was regulatory consent for Celsius's activities.

He nevertheless publicly suggested that there was such consent, even though he knew that it was not true, in order to “lull customers into a false sense of security and to continue depositing their crypto assets with Celsius.”

In 2019, Mashinsky was selling the crypto tokens even though he told the public that he was not, the indictment alleges. He said that he knew customers would draw false comfort from that too.

Celsius's assets grew to about $25 billion at its peak, making it one of the largest crypto platforms in the world, according to prosecutors.

The company pitched itself to customers as a modern-day bank where they could safely deposit crypto assets and earn interest.

But prosecutors said that Mashinsky and co-conspirators used customer deposits to fund market purchases of the Celsius token to prop up its value.

An indictment filed in January by Damian Williams, the U.S. attorney for the Southern District of New York, said that customers were left “holding the bag” when Celsius collapsed into bankruptcy in 2022.

A plea agreement Mashinsky made with prosecutors calls for him to be sentenced to up to 30 years in prison and to forfeit over $48 million, which is the amount of money he allegedly made by selling his company’s token.

Sentencing was scheduled for April 8.