Alex Mashinsky, Founder of Celsius Network, to Plead Guilty to Fraud
According to a recent report by Reuters, Alex Mashinsky, the founder and former CEO of Celsius Network, is set to plead guilty to two counts of fraud. This decision comes after more than a year since Mashinsky was indicted on seven charges, including fraud, conspiracy, and market manipulation, in July 2023. Initially pleading not guilty to all charges, Mashinsky’s defense attorney revealed his intention to change his plea during a hearing on Tuesday.
Legal Proceedings and Bankruptcy Protection
US District Judge John Koeltl’s ruling in November denied Mashinsky’s motion to dismiss two criminal counts, leading up to his scheduled trial in January 2025. Celsius Network, established in 2017, faced financial turmoil and filed for Chapter 11 bankruptcy protection in July 2022 amidst a crypto market downturn that saw a surge in customer withdrawals. However, the company successfully emerged from bankruptcy on January 31 and has since shifted its focus to Bitcoin mining.
Market Manipulation Allegations
Federal prosecutors accused Mashinsky and former chief revenue officer Roni Cohen-Pavon of manipulating the market for Celsius Network’s Cel token. Cohen-Pavon pleaded guilty in September 2023 and agreed to cooperate with prosecutors. Prosecutors claim that Mashinsky personally profited approximately $42 million from selling his Cel token holdings.
Bankruptcy Payouts and Recovery Rate
Currently, Celsius Network is distributing $127 million to eligible creditors in its second bankruptcy payout, resulting in a total recovery rate of 60.4% of eligible claims. This follows the initial distribution in January 2024, which provided approximately 57.7% of eligible claims in liquid crypto assets or cash.