Celsius (CEL) Plunges 13% as Legal Tensions Surrounding Alex Mashinsky Lead to Investor Caution

Celsius (CEL) dropped more than 13% on Wednesday, as legal tensions surrounding ex-CEO Alex Mashinsky’s case led to investor caution.

After a major increase on Monday that saw CEL skyrocket 50% from $0.087 to $0.139, the token has now sharply corrected. At the time of press, CEL was trading around $0.103, down by over 12% over the past day.

The downturn follows fresh updates surrounding Celsius Network’s disgraced founder, Alex Mashinsky.

On May 5, Mashinsky’s legal team slammed the U.S. Department of Justice’s request for a 20-year prison sentence, calling it a “death-in-prison sentence” for the 59-year-old.

Mashinsky’s attorneys stated that the government is overstating the case, putting it in an unrealistic light. They highlighted Mashinsky’s nonviolent history and long-standing business record, adding that he’s being unfairly displayed as the villain behind every Celsius misstep.

DOJ Pushes for Lengthy Sentence

Earlier this year, Mashinsky had pleaded guilty to manipulating the price of CEL and unloading $48 million of the tokens fraudulently. The DOJ is suggesting a 20-year prison sentence, which is the maximum term for the crimes Mashinsky was convicted of.

However, DOJ’s recommendation is still subject to approval by Judge Charles Engelmann of the U.S. District Court in Manhattan, who will ultimately decide Mashinsky’s fate at his sentencing on June 10.

The DOJ’s suggestion of a lengthy sentence comes after highlighting Mashinsky’s actions as calculated in its April 28 recommendation. Suggesting a sentence of 17 years to 21 years, prosecutors first brought seven charges against him in July 2023.

Among these charges were conspiracy to defraud Celsius investors, manipulating the price of CEL, and defrauding investors in a series of cryptocurrency trades.

At the time of the charges, Celsius was in the midst of Chapter 11 bankruptcy, which began in July 2022. A restructuring plan approved in November 2023 led to partial repayments, with $2.53 billion distributed to over 250,000 creditors as of August.

CEL Price Outlook

Despite CEL’s recent rally, recent X data shows that many traders are still cautious due to the token’s scandal-past and its volatile price action. Notably, CEL is currently down nearly 99% from its 2021 all-time high of $8.02.

On the daily chart, the Relative Strength Index (RSI) is still hanging around 57, gradually moving towards overbought territory after its recent spike. A rise in RSI with sustained trading volume could lead CEL to retest $0.139 again.

The Bollinger Bands are seen to be widening slightly, with price now pulling back from the upper band, a sign of a short-term price cooldown.

Crucial support for CEL is at $0.087, and a drop below this could send the token back into prolonged bearish consolidation.