- Alex Mashinsky, founder of Celsius Network, has pleaded guilty to fraud charges, admitting to misleading investors and misusing customer funds
- Mashinsky faces up to 30 years in prison after admitting to commodities and securities fraud and agreeing to forfeit $48 million
- Prosecutors have accused Mashinsky of orchestrating a major crypto fraud, inflating token values, and misleading investors about the company’s financial stability
Alex Mashinsky, the founder of cryptocurrency lender Celsius Network, has pleaded guilty to fraud charges in a Manhattan federal court. Mashinsky admitted to deceiving investors about the company’s health and using customer funds to inflate the value of Celsius’s digital token, CEL. Facing up to 30 years in prison, Mashinsky also agreed to forfeit $48 million and acknowledged his role in one of the crypto industry’s largest frauds.
“What I Did Was Wrong”
In a stunning courtroom admission, Alex Mashinsky, the architect of Celsius Network, acknowledged his guilt in defrauding investors and manipulating the company’s digital token. “I know what I did was wrong and I want to do what I can to make it right,” Mashinsky said during the hearing before U.S. District Judge John Koeltl. Mashinksy was arrested in July 2023 on seven charges, encompassing securities fraud, commodities fraud, and market manipulation.
Celsius Network, once a prominent player in the crypto-lending space, claimed to manage $25 billion in assets at its peak. It attracted investors with promises of high-interest returns and low-cost loans. However, the company filed for bankruptcy in mid-2022 after freezing customer withdrawals amid a crash in cryptocurrency markets. The bankruptcy revealed a staggering $1 billion deficit, devastating its predominantly retail investor base.
Misuse of Customer Funds
Prosecutors detailed how Mashinsky manipulated CEL’s market value to sell his holdings at inflated prices, personally profiting by $42 million. Additionally, he allegedly withdrew $8 million of his own cryptocurrency assets from Celsius while falsely reassuring customers of the company’s financial stability.
Damian Williams, U.S. attorney for the Southern District of New York, described Mashinsky’s actions as “one of the biggest frauds in the crypto industry.” Williams accused Mashinsky of luring ordinary investors with false claims about low-risk investments while secretly using their funds to prop up CEL’s market value. A private message exchange between Mashinsky and a Celsius executive revealed the artificial manipulation, with one message stating: “The value was fake.”
Sentencing is set for April 8, with Mashinsky facing the consequences of what prosecutors have called a “deliberate and egregious” fraud.
