Alex Mashinsky, Founder of Collapsed Crypto Lending Platform Celsius Network, Sentenced to 12 Years in Prison for Fraud

NEW YORK, NY — Alex Mashinsky, the founder and former CEO of bankrupt crypto lending platform Celsius Network, was sentenced to 12 years in prison

New York Judge John Koeltl has sentenced former Celsius CEO Alex Mashinsky to 12 years in prison for defrauding investors in the defunct crypto lending platform.

Koeltl, of the Southern District of New York (SDNY), said the 12 years — composed of a 120-month sentence to be served concurrently with a separate 144-month sentence for the two charges Mashinsky pled guilty to — split the difference between the defense and prosecution's sentencing memos.

"I believe that sentence is fair," Koeltl said Thursday morning.

Prior to Celsius’ collapse in 2022, Mashinsky repeatedly lied to investors about the safety of their deposits. He falsely claimed that Celsius had regulatory approval, he insisted that the platform did not make uncollateralized loans when, in fact, it did, and he lied about selling his CEL tokens while manipulating the price for his own financial gain.

Mashinsky’s poor leadership and self-dealing drove Celsius into bankruptcy, leaving a gaping $1.2 billion hole — which prosecutors said is more like $7 billion at today’s prices — in the company’s balance sheet. The platform’s collapse left thousands of investors in the lurch and unable to access their crypto deposits.

"The victims' statements that you heard today truly highlight the devastating human toll of Mashinsky’s crimes," said U.S. Attorney Damian Williams in a statement. "As we've said before, crypto provides new technologies and opportunities, but it's not an opportunity for fraud. Today's sentence reflects the seriousness of Mashinsky's crimes and sends a clear message that those who engage in such conduct will be held accountable by this office."

Mashinsky was arrested in July 2023 on a seven-count indictment, but eventually reached a plea deal with prosecutors that saw him plead guilty to one count each of securities and commodities fraud last December.

As part of his plea deal, prosecutors agreed to a maximum sentence of 30 years in prison, but suggested a 20-year sentence in their sentencing memorandum filed with the court last month.

“Mashinsky’s crimes were not the product of negligence, naivete, or bad luck,” prosecutors wrote. “They were the result of deliberate, calculated decisions to lie, deceive and steal in pursuit of personal fortune.”

Meanwhile, Mashinsky’s attorneys suggested a sentence of no more than 10 years’ imprisonment, arguing in their sentencing memo that Mashinsky was a “devoted husband and father” who made “a genuine slip” when he took a “risky shot” with investors’ funds.

However, the defense attorneys also noted that Mashinsky had already suffered “tremendous consequences” for his actions, pointing to the loss of his company, his reputation and his “dream.”

“The sentence imposed by this Court will, in no uncertain terms, define the rest of Mashinsky’s life,” they wrote.

After considering both parties' arguments, Koeltl decided on a sentence of 10 years for the securities fraud charge and a 12-year sentence for the commodities fraud charge, to be served concurrently.

Judge Koeltl also ordered Mashinsky to pay restitution to the victims of his crimes.

“I want to apologize to the Celsius users,” Mashinsky said in a brief statement to the court. “I take full responsibility for my actions.”

Several Celsius users also addressed the court, speaking about the devastating impact Mashinsky’s fraud had on their lives and families.

One user, a single mother who lost her entire life savings in Celsius, said she had been forced to sell her house and move in with her parents. Another user, a cancer survivor who had been investing with Celsius for several years, said he was heartbroken by the company’s collapse.

“I feel like I've been betrayed by someone I trusted,” the cancer survivor said.

The judge also noted the letters from Mashinsky's family members, adding that they spoke highly of him and were shocked to learn of his crimes.

"It's clear that you have a good heart and you're capable of better," the judge said.

After handing down the sentence, Judge Koeltl said he hoped the case would serve as a warning to other crypto executives.

"I hope this case will deter others from engaging in similar conduct," he said. "There are no second chances in life, and I hope that Mashinsky will use his time in prison wisely."

The judge went on to note the difficulties that crypto users faced in navigating the rapidly evolving technology and the lack of clear regulatory guidance.

"I hope that this case will also lead to greater awareness among crypto investors of the importance of due diligence and of understanding the risks involved in any investment," he said.

Overall, Judge Koeltl's sentencing remarks highlighted the serious nature of Mashinsky's crimes and the devastating impact they