Alex Mashinsky Faces 20-Year Prison Sentence for Crypto Lender Fraud
Former CEO of Celsius Network, Alex Mashinsky, is facing a potential 20-year prison sentence if the U.S. Department of Justice’s sentencing memo request is granted. The DOJ has labeled his crimes as a deliberate and calculated fraud that resulted in nearly $7 billion in customer losses and financial devastation for thousands.
DOJ Urges 20-Year Prison Sentence
In a memo filed recently, the DOJ has urged the court to impose a 20-year prison sentence on Mashinsky. They have accused him of misrepresenting the safety of customer deposits and manipulating Celsius’s CEL token. Despite pleading guilty in December, Mashinsky allegedly refuses to accept responsibility for his actions, shifting blame onto regulators, market conditions, and even his victims.
Celsius Network’s Downfall
At its peak in 2021, Celsius Network managed over $20 billion in customer crypto assets. Mashinsky marketed the platform as a secure alternative to traditional banks, offering high yields and low risk. However, prosecutors have revealed that these promises were deceptive. Celsius took uncollateralized loans, engaged in risky trades, and used customer assets to manipulate the price of the CEL token while assuring customers of the safety of their funds.
Mashinsky allegedly sold over $48 million worth of CEL at inflated prices, all while claiming to be holding onto the tokens alongside customers. When Celsius collapsed in bankruptcy in July 2022, approximately $4.7 billion in customer funds were trapped, leaving customers with a shortfall exceeding $1 billion.
Significant Losses and Legal Ramifications
Prosecutors estimate that the total loss could be as high as $7 billion when adjusted for post-2024 crypto prices. They have warned that anything less than a substantial prison sentence for Mashinsky would fail to reflect the seriousness of his actions, undermine respect for the law, and set a dangerous precedent for other crypto executives.
Sentencing Date
Judge John G. Koeltl is set to sentence Mashinsky on May 8, determining the fate of the former CEO in this high-profile case.