Alexander Mashinsky Pleads Guilty to Fraud Charges, Facing 30 Years in Prison for Orchestrating 'One of Crypto's Largest Frauds'

The former CEO of the now-bankrupt cryptocurrency lender Celsius admitted to committing commodities fraud and securities fraud connected to two deceptive schemes.

Former Celsius CEO Alexander Mashinsky has pleaded guilty to two counts of fraud in a plea agreement that could land him in prison for up to 30 years.

This development comes after the US Department of Justice (DOJ) initially charged him with seven counts related to fraud, conspiracy, and market manipulation.

However, the plea agreement reduces the charges to two counts of commodities fraud and securities fraud.

Mashinsky entered his guilty plea in a New York courtroom, admitting to two deceptive schemes involving Celsius, a cryptocurrency lender he co-founded.

According to the DOJ, Mashinsky misled customers about “essential aspects” of Celsius's operations, including its profitability and the use of customer funds, in the first scheme.

In the second scheme, US Attorney’s Office for the Southern District of New York alleges that Celsius’ founder engaged in “illegal price manipulation” of Celsius’ native token, CEL, while “secretly” selling his own holdings at artificially inflated prices.

As part of the plea agreement, Mashinsky will also forfeit over $48 million in proceeds from these illegal activities.

Highlighting the significance of the case, US Attorney Damian Williams stated that Maschinsky orchestrated “one of the largest frauds in the crypto industry.”

Williams noted that Maschinsky marketed Celsius as a safe alternative for crypto investments, promising that customer funds were secure and that profits would be returned to users.

However, these claims turned out to be false, as evidenced by the government's investigation.

At the height of its operations, Celsius managed approximately $25 billion in assets, largely due to retail investors attracted by the platform's offerings.

One such program was "Earn," which offered high returns on customer assets.

As the company faced increasing financial pressures, Mashinsky continued to assure clients of its stability, despite withdrawing substantial personal assets from the platform.

According to court documents, Mashinsky and other Celsius executives engaged in a “years-long scheme” to deceive customers about the value and stability of the CEL token.

Authorities further allege that they manipulated the token's price by using customer funds to “prop up” its market value without disclosing these actions to investors.

This manipulation allowed Mashinsky to profit from his sales of CEL.

The situation worsened in June 2022 when Celsius suddenly halted all customer withdrawals, leaving hundreds of thousands of investors unable to access approximately $4.7 billion worth of their crypto assets.

The company filed for Chapter 11 bankruptcy shortly after, culminating in a massive collapse for one of the largest platforms in the cryptocurrency sector.

Currently, CEL is trading at $0.2690, up 9% over the past 24 hours. Despite this recovery, the token has experienced a significant decline, trading down 96% from its record high of $8 in 2021.