Alex Mashinsky, the founder and former CEO of Celsius Network, has been sentenced to 12 years in prison

Alex Mashinsky, the founder and former CEO of Celsius Network, has been sentenced to 12 years in prison for his role in a major cryptocurrency fraud case. The sentence was announced on Monday by U.S. District Judge John Koeltl in Manhattan and comes after Mashinsky pleaded guilty in December to several crimes, including fraud and market manipulation.

Federal prosecutors had urged a 20-year prison term, referring to Mashinsky as the man who made no apology and cheated investors, according to Bloomberg. Mashinsky, on the other hand, pleaded with the court for a reduced sentence of just over one year, saying that he wanted to help his family and former customers. Ultimately, the judge sentenced him to 12 years with 3 years of supervised release. Mashinsky was also ordered to pay a $50,000 fine and forfeit nearly $48.4 million in profits he had collected from the fraud.

Celsius Network, which was founded in 2017 and was previously based in New Jersey, promised high interest rates to those who deposited their cryptocurrency in the platform. Some customers were told by the company that they could earn up to 17% interest on their digital assets. The company profited by advancing these assets to institutional investors and was seeking to become a large-scale, diverse financial services firm.

However, the company began to collapse in 2022 when it ran into difficulties. As the prices of cryptocurrency fell, some customers panicked and went to withdraw their money. Celsius did not have enough funds to fulfill the withdrawal requests and eventually filed for bankruptcy in July 2022. At that time, the company was operating with a $1.19 billion deficit, and $4.7 billion in customer assets were locked up on the platform.

The legal case revealed that this was not a new occurrence and that other executives had been included in the plan for a long time to mislead the public. They used company funds, including customer deposits, to purchase Celsius's own digital token, known as CEL, in an attempt to artificially increase the price. This deception was meant to lure customers into thinking that the token was performing well in the market. In reality, CEL's value was being faked through these secret buy-ins.

One of Celsius's senior executives, Roni Cohen-Pavon, who also pleaded guilty, told Mashinsky privately that the value of the token was a fabrication and that they were able to maintain it by pouring millions of dollars into it. However, Mashinsky continued to make false public statements that the company was financially strong and that he was not selling his tokens. In truth, he was selling large quantities of the tokens and had personally profited significantly. He is said to have secretly sold about $48 million worth of CEL tokens to his own company on several occasions.

Before Celsius froze customer withdrawals in June 2022, Mashinsky had quietly withdrawn $8 million from his own account. When the company finally ceased its operations, a large number of customers were left without access to their funds.

Mashinsky is also being sued in civil court by the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Trade Commission, and the New York Attorney General. This case has now become one of the most serious crypto fraud cases in recent years, and it may set new precedents for the digital finance industry and the protection of investors.