In an announcement that resonates with the volatility and the possible treachery of the crypto world, Alexander Mashinsky, the founder and former CEO of Celsius Network LLC, has pled guilty to charges pertaining to a large-scale fraud that duped retail crypto investors out of billions of dollars. According to a press release from the U.S. Attorney’s Office for the Southern District of New York, Mashinsky faces counts of commodities fraud and securities fraud, which jointly could land him up to 30 years in prison.
As the U.S. Attorney’s Office laid bare, Mashinsky admitted to having misled customers about the financial health and viability of Celsius. This web of deceit saw retail investors promised a semblance of banking security paired with higher returns. Williams stated, “He lured ordinary, retail crypto investors into investing billions of dollars in Celsius with false promises that their investments were low-risk.” He continued to swiftly assure customers about Celsius's success and profitability, when in reality, the company was drowning in debt and making “riskier and riskier bets” with customer funds. In the end, when Celsius reeled back the curtain on its cold fiscal truth, those promises would prove hollow.
The manipulation ran deeper still—Mashinsky engaged in market play to prop up the value of Celsius's native token, CEL. By using company funds and customer deposits, Celsius was able to artificially drive the price of CEL, while Mashinsky profited by selling his holdings at the inflated prices. These actions left a trail of investors holding onto a token with a value far less true than what was presented to them.
Following the narrative spun by Celsius's marketing, by fall 2021, the company thrived in customer growth and ostensibly held assets worth around $25 billion. However, the reality was that "Celsius was never profitable," as noted by Williams, as detailed by the U.S. Attorney’s Office. With a steady hand, Mashinsky continued to publicly sell the dream of financial revolution—"Unbank Yourself"—while siphoning approximately $8 million worth of his personal assets from Celsius before freezing customer withdrawals. On June 12, 2022, the platform ceased all customer withdrawals, subsequently filing for Chapter 11 bankruptcy—a turn of events leaving a reported $4.7 billion in customer assets frozen in the abyss.
With a sentencing date set for April 8, 2024 by Judge John G. Koeltl, the revelation of Mashinsky’s guilty plea has dealt another sobering blow to the credibility of cryptocurrency platforms. Victims of the schemes perpetrated by Mashinsky now seek a resolution, while the case patrols the boundaries of a nascent, yet tumultuous, financial landscape. Those affected have been urged to contact Wendy Olsen-Clancy, the Victim Witness Coordinator at the United States Attorney’s Office of the Southern District of New York, if they wish to provide information related to the sentencing or to receive further details on the case.
