Alexander Mashinsky, former Chief Executive Officer of Celsius Network, has pleaded guilty to two charges of fraud, admitting that that he misled customers about the health of his company and manipulated the value of its proprietary cryptocurrency token.
Mashinsky, 59, entered the plea in a New York federal court, admitting to charges of commodities and securities fraud. He was initially indicted on July 13, 2023, on seven charges, including market manipulation and conspiracy.
In court, Mashinsky admitted to misleading Celsius Network customers by offering false assurances in a 2021 interview, during which he claimed the company had received regulatory approval for its “Earn” program—a statement that was untrue. The “Earn” program allowed customers to deposit their cryptocurrency assets in exchange for promised investment returns.
He said he also failed to disclose that he had been selling his holdings of CEL, his token’s ticker symbol.
”I know what I did was wrong, and I want to try to do whatever I can to make it right,” Mashinsky said.
As part of a plea deal with prosecutors, Mashinsky agreed not to appeal any sentence of 30 years or less—the maximum penalty he will face for the two charges. His sentencing was scheduled for April 8, 2025.
Federal prosecutors in Manhattan said Mashinsky also personally reaped approximately $42 million in proceeds from selling his holdings of the Celsius Network token.
“Mashinsky made tens of millions of dollars selling his own CEL at artificially high prices, while his customers were left holding the bag when the company went bankrupt,” Damian Williams, US Attorney in Manhattan, said in a statement on Tuesday.
Founded in 2017, Celsius Network filed for Chapter 11 bankruptcy protection in July 2022 after a wave of customer withdrawals triggered by a sharp drop in cryptocurrency prices. The company’s bankruptcy proceedings caused significant disruption, with many customers unable to access their funds initially.
Celsius Network emerged from bankruptcy on January 31, 2024, and has since pivoted to Bitcoin mining.
The rapid rise of crypto lenders like Celsius Network coincided with the surge in cryptocurrency prices during the COVID-19 pandemic, with companies offering high-interest rates to attract depositors. These lenders then lent out the funds to institutional investors, hoping to profit from the difference.
However, the 2022 crypto market crash, which saw the collapse of Celsius and other firms, including the now-bankrupt FTX exchange, left many investors with heavy losses.
Mashinsky was among several high-profile figures in the cryptocurrency industry facing charges related to fraud, as the sector grapples with the fallout from the 2022 market downturn.
Despite the crisis, digital asset prices, including Bitcoin, have seen a rebound, partly fueled by optimism surrounding future US government policies favorable to cryptocurrency under President-elect Donald Trump’s administration.
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