Alex Mashinsky, former The CEO of bankrupt cryptocurrency lender Celsius, has pleaded guilty to two counts of fraud, which together carry a maximum sentence of 30 years in prison.
In the wake of the company’s collapse, the US Department of Justice charged Mashinsky with seven counts of fraud, conspiracy and market manipulation. Having originally pleaded not guilty, he would face a criminal trial in the Southern District of New York in January.
However, at a court hearing on Tuesday, Mashinsky pleaded guilty to one count of commodities fraud and one count of securities fraud. Mashinsky has admitted to lying to Celsius customers about fundamental aspects of the business, including how their funds would be used, the DOJ says, as well as manipulating the price of a proprietary crypto token for his personal financial benefit.
As part of the plea deal, Mashinksky agreed to forfeit $48 million in ill-gotten gains. He will be sentenced on April 8, 2025.
“Alexander Mashinsky orchestrated one of the largest frauds in the crypto industry,” U.S. Attorney Damian Williams said in a statement. “Today’s convictions reflect this Office’s commitment to holding fraudsters like Mashinsky accountable for their crimes.”
Founded by Mashinsky in 2017, Celsius marketed itself as a new-age alternative to traditional banks – as the “safest place for your cryptocurrencies,” the Justice Department says.
The company received crypto deposits, which it invested or lent to fund interest payments to customers. People were attracted by promises of interest of up to 17 percent on deposits, dozens of times higher than the rate offered by banks at the time. At its peak, Celsius had more than $25 billion in client assets, the Justice Department says.
However, in May 2022, things went wrong. He Terra Luna stablecoin collapse simultaneously blew a billion dollar hole on Celsius’ balance sheet, and as cryptocurrency prices plummeted, customers panicked and rushed to withdraw billions of dollars in cryptocurrency from their Celsius accounts. Following its investments in Terra Luna and other assets it turned bitterThe company no longer had funds to pay and was eventually forced to suspend withdrawals. In July of that year, degrees Celsius declared bankruptcytrapping $4.7 billion of its clients’ funds.