Alexander Mashinsky, the ex-CEO of the now-defunct crypto lender Celsius, admitted to fraud. He faces up to 30 years in prison.
The Charges
The Department of Justice (DOJ) originally hit him with seven charges, but he pleaded guilty to two: commodities fraud and securities fraud. This involved two main schemes.
Scheme 1: Lying to Customers
Mashinsky misled Celsius customers about the company’s financial health and how their money was being invested. He basically lied about how well the company was doing.
Scheme 2: Manipulating the CEL Token
The DOJ says Mashinsky secretly sold his own CEL tokens (Celsius’s cryptocurrency) at inflated prices while manipulating the market to keep the price artificially high. This is illegal price manipulation.
As part of his plea deal, Mashinsky has to give up over $48 million.
The Fall of Celsius
The US Attorney called this “one of the largest frauds in the crypto industry.” Mashinsky promised customers safety and high returns, but those promises were false.
Celsius, at its peak, managed around $25 billion in assets. It offered an “Earn” program promising big returns, attracting many investors. But as things got worse, Mashinsky kept assuring customers everything was fine, even while secretly pulling out his own money.
Court documents show Mashinsky and other Celsius execs ran a long-term scheme to deceive customers about the CEL token’s value. They even used customer money to boost the token’s price without telling anyone. This let Mashinsky profit from his own sales.
In June 2022, Celsius froze all withdrawals, leaving hundreds of thousands of investors locked out of about $4.7 billion in crypto. The company then filed for bankruptcy.
The Aftermath
CEL, Celsius’s token, is currently trading at $0.2690, a far cry from its 2021 high of $8. While it’s up slightly recently, it’s still down massively overall.
