Alex Mashinsky, co-founder of Celsius Network, has pleaded guilty to fraud charges linked to his involvement in the cryptocurrency lender’s collapse.
The decision marks a significant development in ongoing legal proceedings tied to the broader fallout of the 2022 crypto winter.
Celsius CEO Pleads Guilty to Manipulating CEL’s Market Value
The former Celsius CEO is accused of manipulating the price of the network’s CEL token to attract investors while personally profiting from $42 million.
According to Bloomberg reports, Mashinsky confirmed his intention to plead guilty to two counts: commodities fraud and a scheme to artificially boost the value of CEL at a Manhattan court hearing on Tuesday. The most severe charge could lead to a maximum sentence of 20 years in prison.
The Celsius bankruptcy was among the earliest warnings of the crypto winter, a downturn that erased billions in market value. Celsius’s collapse followed a string of high-profile failures, including the implosion of FTX under Sam Bankman-Fried.
“Alex Mashinsky, ex-Celsius CEO, just got 30 years in prison. I called him out as a fraud for years—he even blocked me and tried to sue me twice. Celsius was a blatant Ponzi scheme,” financial analyst Jacob King wrote on X (formerly Twitter).
Meanwhile, Mashinsky’s former legal counsel, Roni Cohen-Pavon, had already pleaded guilty and agreed to cooperate with authorities. By changing his plea, Mashinsky avoids a trial scheduled for January. This decision could result in a lighter sentence compared to a jury conviction.
Earlier in November, a federal judge denied the Celsius CEO’s request to dismiss fraud charges related to CEL token market manipulation. The court ruled that charges under the Commodity Exchange Act and the Securities Exchange Act could proceed independently, reinforcing the case against him.
Prosecutors allege Mashinsky misled Celsius customers for years and orchestrated manipulative trades to inflate CEL prices. Investigators claim the company spent hundreds of millions on CEL purchases, often using customer deposits without disclosure.
Cohen-Pavon reportedly managed these transactions under Mashinsky’s direction.
“Prosecutors say Mashinsky sweet-talked customers while Celsius burned, pumped the CEL token’s value, and pocketed $42 million before the collapse.By July 2022, Celsius was toast, filing for bankruptcy and freezing $4.7 billion of customers’ assets,” Mario Nawfal wrote on X.
Ongoing Efforts to Reimburse Creditors
Last week, Celsius announced that its creditors are set to receive $127 million in payouts in Bitcoin or USD. Additionally, Celsius filed a lawsuit against Tether, seeking to reclaim over $2 billion in Bitcoin collateral, alleging misuse of the funds.
Earlier this year, Celsius resolved a lawsuit with KeyFi CEO Jason Stone, who had accused the company of operating a Ponzi-like scheme and misrepresenting its risk management practices. The case was based on KeyFi’s role in managing Celsius investments from 2020 to 2021 under a memorandum of understanding.
Overall, Alex Mashinsky’s guilty plea represents a pivotal moment in the broader efforts to hold executives accountable for the failures that destabilized the crypto market.
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