Alexander Mashinsky, the founder and former CEO of Celsius Network LLC, has been sentenced to 12 years in prison for commodities fraud and securities fraud. The announcement was made by Jay Clayton, the United States Attorney for the Southern District of New York. Mashinsky had previously pled guilty on December 3, 2024, before U.S. District Judge John G. Koeltl.
Jay Clayton stated: "Alexander Mashinsky targeted retail investors with promises that he would keep their 'digital assets' safer than a bank, when in fact he used those assets to place risky bets and to line his own pockets. In the end, Mashinsky made tens of millions of dollars while his customers lost billions." He emphasized that "the rules against fraud still apply," highlighting the importance of accountability.
Celsius was a crypto asset platform offering rewards on deposited assets, secured loans, and custody services. It marketed itself as the "safest place for your crypto" and encouraged users to transfer their crypto assets to its platform through programs like "Earn," "Custody," and "Borrow." As CEO, Mashinsky misrepresented aspects of Celsius's business to attract customers globally.
Mashinsky was involved in manipulating CEL's price by purchasing it on the open market using customer deposits without disclosure. This artificial inflation allowed him to profit approximately $48 million from CEL sales while publicly claiming otherwise.
Before Celsius halted withdrawals on June 12, 2022, Mashinsky withdrew $8 million worth of his non-CEL assets from Celsius. When withdrawals were stopped, customers had $4.7 billion in inaccessible assets on the platform. Celsius filed for bankruptcy on July 13, 2022.
Mashinsky has also been sentenced to three years of supervised release and ordered to pay a $50,000 fine along with forfeiture amounting to $48,393,446.
Clayton praised the work of the Federal Bureau of Investigation and thanked both the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission for their parallel civil actions. The case is being overseen by the Office’s Securities and Commodities Fraud Task Force with Assistant U.S. Attorneys Peter J. Davis, Adam S. Hobson, and Allison Nichols leading the prosecution.