Alex Mashinsky, the founder and former CEO of the defunct cryptocurrency lending platform Celsius Network, has been sentenced to 12 years in federal prison for orchestrating a large-scale fraud scheme involving securities and commodities. The sentence was handed down on Thursday by U.S. District Judge John Koeltl in Manhattan, following a lengthy legal process sparked by the collapse of Celsius.
Federal prosecutors accused Mashinsky of misleading customers about the safety and regulatory status of Celsius’s products, particularly the company’s “Earn” program. He was also found to have manipulated the value of Celsius’s native token to artificially inflate its worth. The prosecution stated that Mashinsky’s actions led to billions in customer losses and thousands of victims, while he personally profited by more than $48 million.
Legal Proceedings and Sentence Details
Alex Mashinsky, who was arrested in 2023, pleaded guilty in December 2024 to two counts of fraud. His guilty plea included an admission that he had misrepresented the legitimacy of Celsius’s operations, falsely stating in a 2021 interview that the company had received regulatory approval for its high-yield investment product.
During sentencing, prosecutors requested a minimum 20-year prison term, describing it as a fitting consequence for the scale of financial damage caused. Mashinsky, in contrast, asked for leniency with a proposed sentence of one year and one day. He expressed remorse, claiming a desire to reconcile with his family and the customers who lost their money.
Ultimately, Judge Koeltl imposed a 12-year sentence, which also includes three years of supervised release following incarceration and the forfeiture of $48.4 million in ill-gotten gains. The judge noted the severity of the deception and the lasting impact on retail investors of cryptocurrency sector, who had entrusted their savings to Celsius under false pretenses.
Aftermath of Celsius Collapse and Creditor Repayments
Alex Mashinsky’s sentencing marks a significant chapter in the ongoing fallout from Celsius Network’s dramatic collapse. The company, once a prominent player in the crypto lending space, filed for bankruptcy in 2022 after facing liquidity issues and a loss of customer trust amid broader turmoil in the crypto market.
Following months of legal proceedings and restructuring efforts, Celsius exited bankruptcy in early 2024 and initiated a $3 billion repayment plan to compensate creditors. While some former users are beginning to recover portions of their assets, the collapse of Celsius has become a cautionary tale in the cryptocurrency sector, highlighting the risks of inadequate oversight and misleading practices.
Alex Mashinsky’s conviction and sentencing underscore increasing regulatory scrutiny of digital asset platforms, particularly those operating in lending and yield-generation services without transparent governance. The case has become emblematic of the legal and financial consequences that can follow when crypto firms fail to uphold investor trust and legal compliance.
