Celsius Founder Mashinsky Sentenced to 12 Years for Crypto Fraud

Alex Mashinsky, the founder of the now-defunct crypto lender Celsius Network, has been sentenced to 12 years in prison for his involvement in a multi-billion-dollar crypto fraud scheme. The sentence, handed down by Judge John Koeltl of the Southern District of New York, reflects the severity of Mashinsky's crimes, which included commodities fraud and securities fraud.

Mashinsky's legal team had argued for a lighter sentence, citing his clean record prior to the Celsius collapse, his military service, and his guilty plea. However, prosecutors maintained that Mashinsky's actions warranted a harsher penalty, describing his fraud as one of the largest in the crypto industry. The defense team's plea for leniency was rejected, with the judge emphasizing that the sentence would not mitigate the harm caused to the victims.

Mashinsky, 58, pleaded guilty to one count of commodities fraud and one count of securities fraud in December 2024. He was initially indicted on seven charges, including wire fraud and a scheme to manipulate the price of Celsius' native token, CEL, for personal gain. The judge's sentence of 12 years comprises a 120-month term to be served concurrently with a separate 144-month term for the two charges Mashinsky pled guilty to.

In addition to his prison sentence, Mashinsky will forfeit $48 million and several real estate properties. Prosecutors had initially recommended a 20-year prison term, citing the extensive damage caused by Mashinsky's actions. The defense team, however, argued that a sentence exceeding one year would be equivalent to a "death-in-prison" punishment, given Mashinsky's age and health conditions.

Mashinsky's fraudulent activities included misleading customers about the safety of their investments and falsely claiming that Celsius had regulatory approval. He also misrepresented the platform's lending practices, asserting that it did not engage in uncollateralized loans when it actually did. These deceptive practices led to the collapse of Celsius in 2022, leaving a significant financial gap and causing substantial losses for investors.

Judge Koeltl ordered Mashinsky to self-report to prison by September 12 to begin serving his sentence. If he serves the full term, Mashinsky will be 70 years old upon his release. The case serves as a stark reminder of the consequences of fraudulent activities in the crypto industry and the importance of regulatory oversight and investor protection.