alex mashinskyThe founder and former CEO of crypto lending company Celsius Network pleaded guilty on Tuesday to two counts of fraud.
Mashinsky, 59, was indicted on July 13, 2023, on seven counts of fraud, conspiracy, and market manipulation. Federal prosecutors in Manhattan have alleged that Celsius deceived customers into investing and artificially inflated the value of its proprietary crypto tokens. He pleaded not guilty later that day.
In November, U.S. District Judge John Koeltl denied a motion by Mashinsky to dismiss two criminal charges ahead of a trial scheduled for Jan. 28.
At Koeltl's hearing on Tuesday, Mashinski agreed to plead guilty to two of the seven charges he was originally charged with: commodity fraud and a fraudulent scheme to manipulate the price of CEL, Celsius' internal token. He said he did.
Mashinsky told the court in a 2021 interview that Celsius had received regulatory approval for an “acquisition” program but had not been approved, giving Celsius customers a “false sense of security.” admitted that he had done so.
He also said he did not disclose that he was selling his holdings in CEL, the platform's internal token.
“I know what I did was wrong, and I want to do everything I can to make it right,” Mashinsky said.
As part of his plea agreement with prosecutors, Mashinsky agreed not to appeal the maximum sentence of 30 years in prison on both counts. Mr. Koeltl is scheduled to be sentenced on April 8, 2025.
Federal prosecutors in Manhattan said Mr. Mashinsky personally made about $42 million in proceeds from the sale of his Cel tokens.
“Mr. Mashinsky made tens of millions of dollars by selling his company's CEL at artificially high prices, while his customers lost money when the company went bankrupt,” Manhattan U.S. Attorney Damian Williams said in a statement Tuesday. He was still holding the bag,” he said.
Mashinski was scheduled to go to trial on January 28th before pleading guilty.
“In some cases, accepting responsibility at the appropriate time is the best way for everyone to move forward,” Mashinski's attorney Mark Mukasey told reporters after Tuesday's hearing. There is,” he said.
Celsius, founded in 2017, filed for Chapter 11 bankruptcy protection in July 2022 after customers rushed to withdraw their deposits due to the drop in cryptocurrency prices. Many initially did not have access to their funds. The company emerged from bankruptcy on January 31st and shifted its focus to Bitcoin mining.
Cryptocurrency lenders such as Celsius have grown rapidly as cryptocurrency prices soared during the coronavirus pandemic. They promised easy lending access and amazing interest rates to depositors, then lent their tokens to institutional investors in hopes of profiting from the difference.
Mashinsky was one of several crypto tycoons charged with fraud after the 2022 crypto price slump led to the collapse of a number of companies, including the now-bankrupt exchange FTX.
The price of digital assets like Bitcoin has since skyrocketed, in part due to optimism about President-elect Donald Trump's expected crypto-friendly policies.
Roni Cohen-Pavon, Celsius' former chief revenue officer, pleaded guilty in September 2023 and agreed to cooperate with prosecutors' investigation.
FTX founder Sam Bankman Fried was convicted in November 2023 of stealing approximately $8 billion from the exchange's customers and was sentenced to 25 years in prison in March.
