Bankrupt Celsius Network Founder Pleads Guilty in Fraud Case

Over two years after the bankrupt crypto lending platform Celsius Network collapsed and exposed its operators’ fraudulent scheme, the entity’s founder and former CEO is finally facing the wrath of the law.

According to a press release by the United States Department of Justice (DOJ), the former Celsius boss, Alex Mashinsky, has pleaded guilty to his role in the multi-billion dollar implosion of the lending entity.

Mashinsky pled guilty to one count of committing commodities fraud and one count of committing securities fraud on Celsius. He has agreed to forfeit the $48 million he reaped in profits from his sales of the company’s native token, CEL.

Mashinsky Pleads Guilty to Fraud Charges

Celsius filed for bankruptcy in June 2022, but the firm purportedly held roughly $25 billion before then. After the company’s implosion, the U.S. government found that Mashinsky had misled Celsius customers about the firm’s core aspects and used their funds to manipulate the price of CEL.

The former Celsius CEO misrepresented the entity’s business and financial condition, profitability, yield-generating activities, and the long-term sustainability of its high rewards rates.

While Mashinsky claimed Celsius was doing well, he instructed his executives to spend hundreds of millions of dollars in customer funds to purchase CEL in the open market, artificially inflating the token’s value. As the value of CEL grew, Mashinky occasionally sold his own CEL holdings for profit despite claiming that he had no plans of selling the asset. The DOJ insists that the value of CEL would have been much lower if not for Celsius’ price manipulation.

Mashinsky Faces 30 Years in Prison

It is worth noting that U.S. authorities arrested and charged Mashinsky in July 2023, but the Celsius founder filed a motion to dismiss the charges. In October, a judge rejected the motion and ordered Mashinsky to appear in court and face seven counts of fraud, with his trial initially scheduled for January 28, 2025.

Following this guilty plea, Mashinsky is imprisoned for a maximum sentence of 30 years. The DOJ revealed that his sentencing had been scheduled for April 8, 2025.

“Today’s convictions reflect this Office’s commitment to holding fraudsters like Mashinsky accountable for their crimes,” said U.S. Attorney Damian Williams.

Meanwhile, the Celsius bankruptcy estate began distributing creditor claims earlier this year and is still involved in the payments.