In the latest reckoning from the crash of 2022, Alex Mashinsky, the founder and CEO of bankrupt crypto lender Celsius, pleaded guilty to two fraud charges on Tuesday.

As part of an agreement with US prosecutors, Mashinsky agreed to return $48 million he made from the fraud, according to the US Attorney’s Office for the Southern District of New York.

Never profitable

US Attorney Damian Williams called it “one of the biggest frauds in the crypto industry.”

“Using catchy slogans like ‘Unbank Yourself,’ Mashinsky promised that Celsius would keep customers’ crypto as safe as money in a bank, but unlike a bank, Celsius returned most of the profits from its business back to users,” Williams said in a statement.

“In reality, Celsius was never profitable.”

Mashinsky and Daniel Leon founded lender Celsius in 2017. Mashinsky promised as much as 18% returns on crypto investments.

The Hoboken, New Jersey-based company saw astounding growth and boasted more than $25 billion in assets. The company also issued its own cryptocurrency called CEL, which sported a market capitalisation of more than $3.2 billion in June 2021.

However, in 2022, the wildly popular Terra blockchain collapsed, and the resulting volatility hit Celsius. The company paused withdrawals in June 2022, and then declared bankruptcy.

In 2023, Mashinsky was indicted on seven charges relating to Celsius’ collapse. Prosecutors alleged Mashinsky lied to Celsius’s customers to induce them to lend their crypto to the platform, and that he artificially inflated the price of CEL.

Mashinsky’s trial for fraud and market manipulation over the failure of Celsius was initially scheduled to begin in Manhattan’s Southern District Court January 28.

Instead, the crypto founder will be sentenced in April. He faces as much as 30 years in prison, according to the US Attorney’s Office.

Roni Cohen-Pavon, Celsius’ former chief revenue officer, pleaded guilty to similar allegations in 2023. He is scheduled to be sentenced next week.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can contact him at aleks@dlnews.com.