Alex Mashinsky, the Celsius founder, was sentenced to
12 years in prison for a scheme that unraveled billions in investor funds and
trust, Bloomberg reported. Mashinsky, once a vocal promoter of Celsius
Network’s sky-high returns, will now spend over a decade behind bars after
admitting to defrauding hundreds of thousands of customers.
On Thursday, US District Judge John Koeltl sentenced
the 59-year-old former executive to 12 years in prison after he pled guilty to
securities and commodities fraud charges in December.
The sentence follows the dramatic collapse of Celsius Network in 2022, when revelations surfaced that the platform’s promised safety
and compliance claims were false.
Prosecutors Say Deceit Was Calculated
Prosecutors said Mashinsky misled customers by
asserting that Celsius had regulatory clearance and only made secured loans statements
that proved to be fabrications. He also secretly sold his CEL tokens while
influencing the token’s price, creating the illusion of value for personal
gain.
Federal prosecutors had requested a 20-year sentence,
describing Mashinsky as “unrepentant.” In a court filing, they wrote,
“Mashinsky’s crimes were not the product of negligence, naivete, or bad luck.
They were the result of deliberate, calculated decisions to lie, deceive, and
steal in pursuit of personal fortune.”
Though the maximum possible sentence under his plea
deal was 30 years, Judge Koeltl opted for a term that fell between the
prosecution’s recommendation and the more lenient request from Mashinsky’s
defense team. The 12-year sentence includes two separate terms, 120 months and
144 months, to be served concurrently.
Over $1.2 Billion Lost
Celsius filed for bankruptcy in 2022 after facing a
massive liquidity shortfall, leaving a reported $1.2 billion hole in its
balance sheet. Prosecutors argue that, using today’s crypto prices, the damage
is closer to $7 billion.
The company had lured users with claims of high yields
on crypto deposits and positioned itself as a safe haven amid volatile markets.
Behind the scenes, however, Celsius made risky, uncollateralized loans and
concealed the true state of its finances. Mashinsky’s sentencing marks one of the most
high-profile convictions in the wave of legal actions targeting crypto
executives.
This article was written by Jared Kirui at www.financemagnates.com.