Alex Mashinsky, the founder and former CEO of Celsius Network, was sentenced to 12 years in prison on Thursday for orchestrating a massive fraud that contributed to the collapse of this crypto lending platform.
Celsius’s Alex Mashinsky Jailed for 12 Yrs
Judge John Koeltl of the Southern District of New York described Mashinsky’s crimes as “extremely serious,” delivering a sentence that merges two concurrent terms (one of 120 months and another of 144 months) for the charges he admitted to. Prosecutors had requested a 20-year sentence, while Mashinsky’s defense team asked for just over a year. Apart from the prison term, he agreed to forfeit $48 million and several properties.
Celsius collapsed in 2022, leaving a trail of financial devastation. Mashinsky misled investors about the safety and regulatory compliance of the platform, while secretly making high-risk, uncollateralized loans. He also manipulated the value of CEL tokens to cash out over $48 million in personal profit, according to prosecutors. Celsius ultimately filed for bankruptcy with a $1.2 billion hole (which is now estimated at closer to $7 billion)in its balance sheet.
Over 100,000 creditors claim to have lost $4.7 billion in the fallout. Victims testified in court, detailing the lasting emotional and financial trauma they suffered. Some lost savings meant for their children’s college tuition; others reported lasting mental health impacts. One victim, Cameron Crewes, criticized Mashinsky’s apparent lack of accountability, calling his courtroom apology a “horrific minimization” of the damage he caused.
Crewes said, “Defense says he’s working on a new book about gravity, but he seems not to understand the gravity of the situation,”, adding that at least 231 Celsius creditors have died since the platform’s collapse, and will never be made whole.
Another, Hugh Mitton, lamented the silence of other Celsius executives, emphasizing how the collapse affected real families.
Mashinsky wept during sentencing and offered an apology, saying, “I respectfully ask the victims for forgiveness and I apologize to all of them for my mistakes. I’m truly sorry.” His lawyer attempted to portray him as a compassionate person, citing his military service, hiring of homeless workers, and even a book he’s writing on gravity.
US Attorney Jay Clayton made it clear the case was about accountability, not crypto innovation. “The case for tokenization and digital assets is strong,” he said, “but it is not a license to deceive.”
Just days ago, Mashinsky criticized the US Department of Justice’s (DOJ) decision for a 20-year prison sentence, calling it as a “venom-laced” and disproportionate punishment that would amount to dying behind bars.
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