Alex Mashinsky, Founder of Celsius Network, Faces Up to 20 Years in Prison for Crypto Fraud

Alex Mashinsky, once a popular figure behind Celsius Network, is now standing at the center of one of the most high-profile crypto fraud cases to date.

Alex Mashinsky, the former CEO of bankrupt crypto lender Celsius, is facing a 20-year prison sentence from U.S. authorities for his role in one of the biggest crypto fraud cases to date.

The U.S. Department of Justice (DOJ) is seeking a hefty sentence for Mashinsky, who is now a disgraced figure in the crypto industry.

Prosecutors are highlighting Mashinsky’s “deliberate, calculated” actions that they say led to billions in customer losses. They also note that Mashinsky himself had the opportunity to avoid this fate.

If you missed it, Mashinsky's sentencing hearing is now set for May 8 and will be a major event not just for him, but for the broader crypto industry.

As part of his plea agreement, Mashinsky has agreed to forfeit any claim to the $15 million that a bankruptcy judge ruled last year should go to Celsius creditors. A statement from the DOJ on Monday, April 8, confirms that he will also be ordered to pay restitution to the victims.

After a turbulent period that saw crypto startup Celsius go bankrupt and its CEO face serious legal repercussions, the case has finally reached a critical stage.

In December 2024, Mashinsky pleaded guilty in a New York federal court to two counts of fraud, as well as commodities fraud and price manipulation of Celsius’s native CEL token. The plea agreement also includes a provision for a 15-year sentence, although ultimately the judge will decide the appropriate punishment.

The DOJ is arguing for the maximum sentence of 20 years, given the severity of Mashinsky’s actions and the ensuing damage.

Rising From the Dust

Celsius, founded in 2017, rose to prominence during the cryptocurrency boom. The lending platform positioned itself as a user-friendly alternative to traditional banks, offering attractive interest rates of up to 18% annually through its popular “Earn” program.

Users could deposit cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) and watch their balances grow. At least on paper, as the firm’s collapse later revealed that these attractive returns were largely funded by new user deposits and a risky investment strategy.

Meanwhile, Mashinsky, the venture’s CEO, was often presented as a forward-thinking leader in the emerging Web3 space, and he appeared committed to rallying the community.

He frequently told users he was “HODLing” alongside them, emphasizing a shared stake in the platform’s success. At the company’s peak in 2021, Celsius managed over $20 billion in crypto assets from retail users around the world.

However, behind the scenes, a very different story was playing out.

The Scam Unfolds

Federal prosecutors allege that the Celsius empire was built on a foundation of lies. The DOJ’s sentencing memo, seen by Blockworks, reveals that Mashinsky was the mastermind behind one of the largest crypto fraud cases in history.

Throughout the course of the case, Mashinsky made a point of shifting blame onto external factors, such as crypto market volatility and the actions of regulators.

Despite this, the DOJ is standing firm on its position that Mashinsky’s sentence should be as serious as his crimes. They argue that leniency could embolden others in the industry and risk further eroding trust among crypto users.

At 59, Mashinsky could spend the rest of his life in prison if the DOJ’s request is granted. He has agreed on the terms of his plea agreement to waive his right to appeal a sentence of 30 years or less.

The crypto community will be watching closely as Judge John G. Koeltl delivers his verdict on May 8.