NEW YORK (AP) — Alexander Mashinsky, the founder and former CEO of the failed cryptocurrency platform Celsius Network, could face decades in prison after pleading guilty on Tuesday to federal fraud charges in a New York court.
The 58-year-old Manhattan resident admitted to commodities and securities fraud, acknowledging that he manipulated the price of Celsius’s proprietary crypto token while secretly profiting by selling his own tokens at inflated prices. He pocketed about $48 million before the company’s bankruptcy in 2022.
In his plea, Mashinsky admitted to publicly misleading customers in 2021, falsely suggesting that Celsius had regulatory approval for its actions. He confessed to knowing that customers would feel falsely reassured by these statements. Additionally, in 2019, Mashinsky was selling crypto tokens even though he told the public that he wasn’t, a tactic designed to provide customers with a false sense of security.
“I accept full responsibility for my actions,” Mashinsky stated, acknowledging that his crimes spanned from 2018 to 2022 as Celsius marketed itself as a secure platform for customers to deposit crypto and earn interest. U.S. Attorney Damian Williams described Mashinsky’s actions as one of the largest frauds in the crypto industry, with Celsius assets allegedly reaching $25 billion at its peak.
Mashinsky used slogans like “Unbank Yourself” to lure customers, promising them the safety of their funds, similar to traditional banking. Meanwhile, prosecutors claim that Mashinsky and his co-conspirators used customer deposits to inflate the value of the Celsius token, leaving customers with significant losses when the company went bankrupt.
As part of the scam, Mashinsky sold tens of millions of dollars’ worth of his CEL tokens at artificially high prices, leaving Celsius clients “holding the bag” once the platform collapsed.
