Alex Mashinsky, the founder of cryptocurrency lender Celsius Network, was sentenced to 12 years in prison for defrauding hundreds of thousands of users who trusted his platform with promises of high yields and bank-like security. The sentencing took place in a Manhattan federal court, with Judge John Koeltl handing down the verdict.
Mashinsky, 59, had pleaded guilty in December 2024. Prosecutors had sought a harsher 20-year sentence, labeling him “unrepentant” and accusing him of lacking remorse for his actions. The case against Mashinsky highlighted how Celsius had amassed $25 billion in assets at its peak but collapsed during the 2022 “crypto winter,” leaving users unable to withdraw their funds.
The Collapse of Celsius
Celsius gained popularity through Mashinsky’s charismatic YouTube appearances, where he touted the platform’s supposed security and high returns. However, the company’s downfall came in June 2022 when it failed to meet user withdrawal demands, leading to bankruptcy just a month later. Prosecutors claimed that Mashinsky manipulated the price of Celsius’s native token, CEL, and made false statements about the company’s financial health in “Ask Mashinsky Anything” videos, reaping $42 million in personal profits.
The case is part of a broader crackdown on crypto fraud by the U.S. Department of Justice under the Biden administration. Other crypto figures, such as Sam Bankman-Fried of FTX, are already serving significant sentences, while others like Do Kwon of Terraform Labs await trial.
Shift in Crypto Regulation
Interestingly, Mashinsky’s sentencing coincides with a potential easing of regulatory pressure on the crypto sector under the Trump administration. In April, the Department of Justice issued new guidelines limiting the scope of crypto-related prosecutions, though it vowed to continue pursuing cases involving fraud victims.
During the sentencing hearing, Mashinsky tearfully apologized, calling his false statements “unpardonable” and claiming he had always aimed to protect the Celsius community, though he acknowledged his failure in making rash decisions during the market collapse. His lawyers argued for a lenient sentence of just over a year, portraying him as a victim of market volatility rather than a malicious actor.
The prosecution, however, painted a different picture: Mashinsky orchestrated “a campaign of lies and self-enrichment for years,” causing billions in losses and harming countless customers. Over 200 victims had urged the judge to impose a severe sentence.
Key points from the case include:
- Mashinsky’s false promises and manipulation led to over $5 billion in cryptocurrency losses for Celsius users.
- Prosecutors highlighted his personal gain of $42 million through his actions.
- The sentencing reflects a broader U.S. crackdown on crypto fraud.
- The regulatory environment for crypto is potentially easing under new guidelines.