Alex Mashinsky, Founder and Former CEO of Celsius, Pleads Guilty to Fraud

Mashinsky
repeatedly
lied
to
investors
about
whether
the
platform
was
making
uncollateralized
loans.

Updated
Dec
3,
2024,
9:44 p.m.
UTCPublished
Dec
3,
2024,
9:19 p.m.
UTC

Alex
Mashinsky,
the
founder
and
one-time
CEO
of
bankrupt
crypto
lending
platform
Celsius
Network,
pleaded
guilty
to
two
counts
of
fraud
on
Tuesday
afternoon,
according
to
reports
from
Reuters
and
Inner
City
Press.

He
has
reportedly
agreed
to
a
maximum
sentencing
guideline
of
360
months,
or
30
years,
in
prison.

Last
July,
Mashinsky
was
arrested
in
New
York
and
charged
with
seven
criminal
counts
tied
to
the
operation
of
and
the
2022
collapse
of
his
company,
including
securities
fraud,
commodities
fraud,
wire
fraud
and
conspiracy
to
manipulate
the
price
of
Celsius’
native
token,
CEL.

“I
said
that
Celsius
had
approval
from
regulators.
It
was
false.
I
falsely
said
I
was
not
selling
my
CEL
tokens,
I
accept
full
responsibility
for
my
actions,”
Inner
City
Press
quoted
Mashinsky
as
saying
in
court.
“I
did
not
know
which
law
it
was
violating,
but
I
knew
it
was
wrong
…
and
illegal.”

Mashinsky
originally
pleaded
not
guilty
and
attempted
to
have
two
of
the
charges
—
the
commodities
manipulation
charge
and
a
market
manipulation
charge
—
dismissed.
However,
the
judge
overseeing
Mashinsky’s
case,
U.S.
District
Court
Judge
John
G.
Koeltl
of
the
Southern
District
of
New
York
(SDNY)
ruled
that
his
attorney’s
arguments
against
the
charges
were
“without
merit”
meaning
that,
if
he
went
to
trial,
Mashinsky
would
have
to
face
the
full
seven-count
indictment.

He
pled
guilty
to
commodities
and
securities
fraud
on
Tuesday.

Celsius
halted
withdrawals
in
June
2022,
a
month
after
the
collapse
of
Do
Kwon’s
Terra/LUNA,
citing
“extreme
market
conditions.”
The
following
month,
it
filed
for
Chapter
11
bankruptcy
protection
in
New
York,
one
of
the
first
in
a
slew
of
bankruptcies
of
similarly-situated
crypto
platforms
including
Voyager
Digital,
BlockFi,
Genesis
and
FTX.

Read
More:

The
Fall
of
Celsius
Network:
A
Timeline
of
The
Crypto
Lender’s
Descent
into
Insolvency

Though
the
collapse
of
Terra/LUNA
and
crypto
hedge
fund
Three
Arrows
Capital
put
a
squeeze
on
many
crypto
companies
in
the
latter
half
of
2022,
Celsius
had
itself
—
and
its
management
—
to
blame
for
its
financial
woes.

For
years
before
Celsius’
collapse,
Mashinsky
was
telling
customers
on
his
regular
livestreams
not
to
“listen
to
the
FUD-ers”
about
the
company’s
lending
practices,
assuring
them
that
“Celsius
does
not
do
non-collateralized
loans…Celsius
will
not
do
that
because
that
would
be
taking
too
much
risk
on
your
behalf.”
However,
the
company
was,
in
fact,
making
uncollateralized
loans.
When
it
filed
for
bankruptcy,
lawyers
for
the
crypto
lending
platform
admitted
Celsius
had
a
$1.2
billion
hole
in
its
balance
sheet.

Flashback
to
2020:

What
Crypto
Lender
Celsius
Isn’t
Telling
Its
Depositors

Mashinsky
is
set
to
be
sentenced
in
Manhattan
on
April
8,
2025
at
11:30
a.m.
ET.