Former Celsius CEO Alex Mashinsky to Plead Guilty in Fraud Case
December 4, 2024
Alex Mashinsky, co-founder of Celsius Network, has pleaded guilty to fraud charges related to the collapse of the crypto lender. The decision marks a major development in ongoing legal proceedings related to the broader fallout from the 2022 crypto winter.
Celsius CEO Admits Manipulating CEL Market Value
The former CEO of Celsius has been accused of manipulating the price of the network’s CEL token to attract investors while personally making $42 million in profits.
Mashinsky confirmed his intention to plead guilty to two counts: commodity fraud and a scheme to artificially inflate the value of CEL at a hearing in Manhattan court on Tuesday, Bloomberg reported. The more serious charge could carry a maximum sentence of 20 years in prison.
The Celsius bankruptcy was among the first warnings of a crypto winter, a downturn that wiped billions off the market’s value. The Celsius collapse was followed by a series of high-profile failures, including the explosion of FTX under Sam Bankman-Fried.
Financial analyst Jacob King wrote on X (formerly Twitter): “Alex Mashinsky, former CEO of Celsius, just got 30 years in prison. I called him a fraud for years - he even blocked me and tried to sue me twice. Celsius was a clear Ponzi scheme.”
Meanwhile, Mashinsky’s former legal adviser, Ronny Cohen-Pavon, has already pleaded guilty and agreed to cooperate with authorities. By changing his plea, Mashinsky avoids a trial scheduled for January. The decision could result in a lighter sentence than a jury conviction.
Earlier in November, a federal judge denied the Celsius CEO’s request to dismiss fraud charges related to his manipulation of the CEL token market. The court ruled that the charges under the Commodity Exchange Act and the Securities Exchange Act could proceed independently, strengthening the case against him.
Prosecutors allege that Mashinsky misled Celsius customers for years and orchestrated manipulative trades to drive up CEL’s price. Investigators allege the company spent hundreds of millions buying CEL, often using customer deposits without disclosing them.
Cohen-Pavon reportedly conducted these transactions under Mashinsky's direction.
“Mashinsky wooed clients with sweet talk while Celsius burned, pumping up the value of the CEL token and making $42 million before the crash,” prosecutors said. “By July 2022, Celsius was defunct, filing for bankruptcy and freezing $4.7 billion in client assets,” Mario Naval wrote on X.
Ongoing efforts to compensate creditors
Celsius announced last week that creditors will receive $127 million in payments in bitcoin or US dollars. Additionally, Celsius has filed a lawsuit against Tether, seeking to recover more than $2 billion in bitcoin collateral, accusing it of misusing the funds.
Earlier this year, Celsius settled a lawsuit with KeyV CEO Jason Stone, who accused the company of running a Ponzi-like scheme and misrepresenting risk management practices. The case was based on KeyV’s role in managing Celsius’ investments from 2020 to 2021 under a memorandum of understanding.
Alex Mashinsky’s guilty plea represents a pivotal moment in the broader effort to hold executives accountable for failures that have destabilized the cryptocurrency market.