Former Celsius CEO Sentenced to 12 Years for Fraud Charges
Alexander Mashinsky, the 50-year-old founder and former CEO of the now-bankrupt cryptocurrency trading platform Celsius, was sentenced on Thursday to 12 years in prison on fraud charges. This sentencing comes nearly three years after Celsius’s dramatic collapse.
Mashinsky had pleaded guilty last December to securities fraud as part of a deal that reduced the level of charges he faced. The indictment against him revealed that Celsius executives had misused over $4 billion in customers’ assets to finance the platform’s operations, make unsecured loans, and invest in high-risk ventures. Additionally, Mashinsky was accused of manipulating the price of Celsius’s own cryptocurrency, CEL, by using customer funds to artificially inflate its value.
At its peak in late 2021, Celsius boasted over one million clients and managed more than $25 billion in assets. However, the company faced severe financial difficulties in the spring of 2022 as cryptocurrency values plummeted. On June 12, 2022, Celsius froze over $4.7 billion in customer accounts due to deep customer withdrawals, before filing for bankruptcy protection a month later.
A progress report published in March revealed that 93% of the frozen assets had been recovered and returned to former Celsius customers. The collapse of Celsius in 2022 was part of a larger cryptocurrency market downturn that affected several other startups, including FTX, the second-largest crypto exchange, which filed for bankruptcy in November 2022.
The sentencing of Mashinsky marks a significant development in the aftermath of Celsius’s bankruptcy and highlights the regulatory challenges and risks associated with cryptocurrency platforms.
