Alexander Mashinsky, the founder and former CEO of Celsius Network LLC, has been sentenced to 12 years in prison for committing commodities fraud and securities fraud. This announcement was made by Jay Clayton, the United States Attorney for the Southern District of New York. Mashinsky had previously pled guilty to these charges on December 3, 2024, before U.S. District Judge John G. Koeltl.
U.S. Attorney Jay Clayton stated, "Alexander Mashinsky targeted retail investors with promises that he would keep their 'digital assets' safer than a bank, when in fact he used those assets to place risky bets and to line his own pockets. In the end, Mashinsky made tens of millions of dollars while his customers lost billions." He emphasized that "the case for tokenization and the use of digital assets is strong but it is not a license to deceive."
Celsius marketed itself as a secure platform offering rewards on deposited crypto assets and other financial services like secured loans and custody services. It encouraged users to transfer their crypto assets with promises of high returns through its "Earn" program. However, Mashinsky misrepresented key aspects of Celsius's business operations and finances during his tenure as CEO.
The company also engaged in price manipulation of its proprietary crypto token CEL by purchasing it on the open market using customer deposits without disclosure. This artificially inflated CEL's value, allowing Mashinsky to profit approximately $48 million from selling his shares while publicly denying such sales.
Before Celsius halted customer withdrawals on June 12, 2022, due to financial instability, Mashinsky withdrew $8 million worth of non-CEL assets from the platform. Subsequently, Celsius filed for bankruptcy on July 13, 2022.
In addition to his prison sentence, Mashinsky was ordered three years of supervised release and must pay a $50,000 fine along with forfeiture amounting to $48,393,446.
Jay Clayton commended the Federal Bureau of Investigation's work on this case and acknowledged parallel civil actions filed by both the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission.
The prosecution is being handled by Assistant U.S. Attorneys Peter J. Davis, Adam S. Hobson, and Allison Nichols under the oversight of the Office’s Securities and Commodities Fraud Task Force.
