DOJ Seeks 20-Year Sentence for Celsius Founder Mashinsky Over $550 Million Fraud

The US Department of Justice (DOJ) has formally requested a 20-year prison sentence for Alex Mashinsky, the founder and former CEO of the now-defunct cryptocurrency lending platform Celsius. This severe penalty is being sought due to Mashinsky's fraudulent activities, which resulted in significant financial losses for Celsius customers.

The DOJ filed the government’s sentencing memorandum on April 28, detailing the extensive fraudulent actions that led to multibillion-dollar losses. According to the 97-page memo, Celsius users were unable to access approximately $4.7 billion in crypto assets after the platform halted withdrawals on June 12, 2022. The DOJ emphasized that Mashinsky's crimes were not accidental but rather the result of deliberate, calculated decisions to deceive and steal for personal gain.

Mashinsky's personal benefit from these fraudulent schemes was substantial, amounting to $48 million. In his plea agreement in December 2024, Mashinsky admitted to leading the criminal activity at Celsius, acknowledging that his actions resulted in losses exceeding $550 million. The DOJ's sentencing memorandum underscores the severity of Mashinsky's actions, stating that a 20-year prison sentence is just punishment for his years-long campaign of lies and self-dealing.

The DOJ's request for a lengthy sentence is backed by over 200 victim impact statements submitted to the court. Many of these victims have called for the maximum punishment, citing significant financial and emotional losses. One investor, Brandon Lawrence, reported losing 1.5 Bitcoin and facing debt and reputational damage. Another victim, a retired teacher, lost approximately $400,000 in retirement savings and suggested that a three-year sentence would be acceptable if Mashinsky returned the stolen funds.

Mashinsky's legal team has argued for a more lenient sentence, suggesting no more than a one-year prison term. However, probation officers have recommended a 15-year sentence, indicating the severity of the crimes and the impact on victims. The court's decision will ultimately determine the length of Mashinsky's imprisonment.

The collapse of Celsius in 2022 was a significant event in the cryptocurrency industry. The company, which was founded in 2018, had grown to manage approximately $10 billion in crypto assets by 2021. However, in June 2022, Celsius froze customer withdrawals, leading to a bankruptcy filing a month later. At the time of the bankruptcy, the company had only $167 million available, far less than what was needed to repay its users. Court records reveal that Mashinsky and his wife withdrew about $12 million in cryptocurrency before the company's collapse, further infuriating investors.

The DOJ's request for a 20-year sentence reflects the seriousness of the charges against Mashinsky and the impact of his actions on the cryptocurrency community. The case serves as a reminder of the risks associated with investing in cryptocurrency and the importance of regulatory oversight in the industry. As the legal proceedings continue, the outcome will be closely watched by investors and industry participants alike.