Crypto Fraud Update: Celsius Founder Sentenced to 12 Years in Prison
By: Michael L. Moskowitz, Esq.
Alexander Mashinsky, the founder and former CEO of Celsius Network, has been sentenced to 12 years in prison for orchestrating a wide-ranging fraud that deceived customers and investors about the financial health and practices of the now-defunct cryptocurrency lending platform.
A Crypto Vision Gone Awry
Once hailed as a visionary aiming to “help people” through democratized finance, Mashinsky’s downfall marks one of the most dramatic turns in the turbulent world of crypto. During his emotional court statement, he told U.S. District Judge John Koeltl, “I wanted to be of service to people… and I destroyed that.” But the federal judge and prosecutors alike viewed his crimes through a different lens: one of deliberate deception and exploitation of retail investors.
At its peak, Celsius managed $25 billion in assets and served over one million customers, marketing itself as a “crypto bank” offering high-yield rewards for crypto deposits and collateral-backed loans. In truth, prosecutors argued, Celsius was a “house of cards” built on risky investments, misrepresentations, and price manipulation.
Lies, Losses, and Legal Fallout
Mashinsky’s sentencing followed his December guilty plea to securities and commodities fraud. Notably, the court found his admissions limited and disingenuous. Though he acknowledged misleading statements—such as falsely claiming regulatory approval and lying about personal CEL token sales—Judge Koeltl emphasized his failure to address the broader impact of his fraudulent conduct.
Celsius collapsed in July 2022 amid a crypto market crash, filing for Chapter 11 bankruptcy with a $1.2 billion deficit. Customers collectively lost over $590 million. Many victims wrote to the court, detailing lost life savings and emotional trauma. The judge noted these letters as “extraordinarily moving.”
Mashinsky was ordered to forfeit $48 million and pay a $50,000 fine, with restitution to victims still pending. He is set to report to prison on September 12.
Falcon Rappaport & Berkman remains active in the crypto-bankruptcy arena representing a multitude of investors affected by the bankruptcy filings of Celsius and FTX, among others. Any questions regarding these matters can be directed to either Michael Moskowitz (mlm@frblaw.com) or Moish Peltz (mpeltz@frblaw.com).
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