Alex Mashinsky pleads guilty to fraud, admitting to false claims and manipulating Celsius' CEL token prices.
The former Celsius CEO faces up to 30 years in prison after profiting $42M from inflated token sales.
Mashinsky's plea highlights the legal fallout from the 2022 crypto crash, affecting investors and industry trust.
Alex Mashinsky, the founder of the defunct Celsius Network crypto company and the former leader of the firm has pleaded guilty to two fraud charges. He was presented before the US District Judge, John Koeltl on Tuesday to plead guilty to commodities fraud and manipulation of the price of CEL, the company's native token.
Mashinsky, 59, started with seven charges against him among which were fraud, conspiracy, and market manipulation. He was charged in July 2023 but denied the charges at that time.
https://twitter.com/manoj_rakshi/status/1864165461430046784 False Claims and Misleading Statements
During the hearing, Mashinsky confessed to giving false claims in 2021. He claimed Celsius had regulatory approval for its “Earn” program, which it did not. This program allowed users to earn returns on their cryptocurrency deposits. Mashinsky also failed to disclose that he had been selling his CEL holdings while artificially inflating the value of the token.
"I know what I did was wrong," Mashinsky stated in court. He expressed a desire to make amends for his actions.
As part of a plea deal, Mashinsky agreed not to appeal any sentence of 30 years or less. He is scheduled for sentencing on April 8, 2025. If convicted on all charges, he would have faced a significantly longer sentence.
The federal prosecutors unveiled that Mashinsky personally profited $42 million through the sale of CEL at higher prices. The US Attorney for the Southern District of New York, Damian Williams, has condemned Mashinsky’s conduct, stating that he profited millions while customers lost money when Celsius went bankrupt.
Celsius and the Broader Crypto Crisis
Celsius could not balance a large number of customers' withdrawals in July 2022 and declared bankruptcy. This company Flourished promising high returns during the period of high volatility in the digital currencies but fell during the bear market. It rose again from bankruptcy in January 2023 and changed its business model to Bitcoin mining.
Mashinsky’s case reveals problems in the cryptocurrency industry. Other executives have also been charged with fraud. Sam Bankman of FTX is another example of an executive charged after the 2022 crash of FTX.
Roni Cohen-Pavon, Celsius’ former Chief Revenue Officer, entered a plea of guilty in September 2023 and offered to cooperate with the prosecutors in other investigations. Mashinsky’s plea marks another chapter in the legal fallout from the cryptocurrency collapse.
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