DOJ Seeks 20-Year Sentence for Celsius Founder Mashinsky in $7B Fraud Case

The U.S. Department of Justice has formally requested a 20-year prison sentence for Alex Mashinsky, the founder and former CEO of the now-defunct cryptocurrency lending platform Celsius Network. This recommendation follows Mashinsky's guilty plea to multiple fraud-related charges in December. The DOJ alleges that Mashinsky orchestrated a massive fraud scheme that misled thousands of investors, resulting in billions of dollars in losses.

The DOJ's sentencing memo, filed late yesterday, accuses Mashinsky of executing a calculated scheme to enrich himself at the expense of Celsius customers. The department asserts that his actions were not due to mismanagement or market downturns but were instead "deliberate, calculated decisions to lie, deceive, and steal." Mashinsky is charged with misrepresenting the safety of customer deposits and artificially inflating the price of Celsius’s native token, CEL. Despite promising high yields and low risk, prosecutors claim he engaged in risky trading, issued uncollateralized loans, and misused customer assets behind the scenes.

At its peak in 2021, Celsius managed over $20 billion in crypto assets. The platform collapsed into bankruptcy in July 2022, leaving about $4.7 billion in customer funds trapped. Prosecutors now estimate the total loss at nearly $7 billion, accounting for current crypto market values. The DOJ alleges that Mashinsky personally gained from the fraud, selling more than $48 million worth of CEL while publicly telling customers he was holding the token alongside them. Prosecutors argue that his assurances were part of a broader deception that left thousands of investors financially devastated.

Despite pleading guilty, Mashinsky has not acknowledged the full extent of his wrongdoing, according to the DOJ. The memo claims he continues to shift blame onto regulators, market conditions, and even his victims. Prosecutors argue this lack of remorse justifies the maximum recommended sentence. "Mashinsky’s refusal to take responsibility underscores the need for a significant sentence," the DOJ stated. "It is essential to send a clear message to other crypto executives."

The Mashinsky case is one of the most high-profile fraud prosecutions in the crypto industry to date. It comes amid growing calls for regulation and oversight in the digital asset sector. Prosecutors warned that a lenient sentence could undermine public trust and embolden others to prioritize personal gain over investor protection. The court has scheduled May 8 as the sentencing date.