Celsius Founder Sentenced to 12 Years for Defrauding Crypto Investors

Alexander Mashinsky, founder and former CEO of collapsed crypto lending platform Celsius Network, has been sentenced to 12 years in federal prison for defrauding customers out of billions by misrepresenting the safety of their investments.

A U.S. District Court in Manhattan handed down the sentence on Thursday, with Judge John G. Koeltl describing Mashinsky’s conduct as “extremely serious.” The 59-year-old entrepreneur was found to have misled thousands of customers between 2018 and 2022, encouraging them to deposit their savings with Celsius under the guise of a secure, interest-earning platform. Instead, he secretly engaged in risky financial strategies, ultimately pocketing more than $45 million while many investors lost everything.

“This was not just a financial crime – it was a betrayal of trust,” said Assistant U.S. Attorney Allison Nichols. “Mashinsky preyed on hope. He sold people a dream, knowing full well it was built on deception.”

Celsius filed for bankruptcy in 2022 following a dramatic downturn in the cryptocurrency market, which exposed the company’s financial vulnerabilities. Despite positioning itself as a crypto version of a traditional bank, Celsius had made uncollateralized loans and speculative bets with customer funds.

Mashinsky, who pleaded guilty in December, acknowledged in court that he had exaggerated Celsius’ stability and profitability. He became emotional during sentencing, apologizing to victims and speaking about his humble beginnings – emigrating from a small town in the former Soviet Union to Israel and later to the United States. “I never intended to hurt anyone,” he said. “I’m truly sorry.”

However, prosecutors argued that his remorse came too late, with hundreds of victim statements detailing the devastating impact of the collapse. Cameron Crewes, a representative of the victims’ committee, said nearly 250 affected individuals died before seeing justice or compensation. “Many lives were ruined,” he said.

In a statement following the sentencing, U.S. Attorney Jay Clayton emphasized the broader implications of the case: “Mashinsky enriched himself while customers lost billions. The promise of digital assets must not come at the expense of honesty. Fraud remains fraud, no matter the platform.”

The court proceedings serve as one of the most high-profile criminal cases to emerge from the recent wave of cryptocurrency collapses, underscoring growing regulatory scrutiny of the sector.