TLDR
- Alex Mashinsky, former Celsius CEO, faces sentencing on May 8 with DOJ requesting 20 years for commodities fraud and price manipulation
- Mashinsky pleaded guilty to 2 of 7 charges in December 2024, earning $48 million by selling CEL tokens before Celsius collapsed in June 2022
- His legal team argues he should receive no more than 366 days as a first-time, nonviolent offender
- Hundreds of victim impact statements detail financial losses, with most calling for severe punishment
- Celsius filed for bankruptcy in July 2022 owing $4.7 billion, with $2.53 billion repaid to 251,000 creditors in August 2024
Alex Mashinsky, the founder and former CEO of bankrupt crypto lending platform Celsius, is set to be sentenced on May 8 for his role in misleading users and manipulating the price of the company’s CEL token. The case has drawn widespread attention within the crypto community, with hundreds of victim impact statements filed with the court.
Mashinsky pleaded guilty in December 2024 to two out of seven charges originally filed against him in July 2023. The charges he admitted to were commodities fraud and manipulating the price of CEL. Through these actions, he earned $48 million by selling his holdings before Celsius collapsed in June 2022.
The US Department of Justice has requested that Mashinsky receive at least 20 years behind bars. If the 59-year-old serves the full sentence, he would be 79 upon release. Prosecutors have characterized his crimes as “deliberate, calculated decisions to lie, deceive and steal.”
Mashinsky’s legal team has fired back at what they call a “venom-laced” sentencing request. In a May 5 reply memorandum filed in a New York district court, his lawyers argued he should receive no more than 366 days in prison.
Victim Impact and Legal Arguments
The legal battle has brought forth hundreds of victims who lost money due to the Celsius collapse. Many had entrusted their life savings to the protocol, believing Mashinsky’s assurances that it was safe.
“Many of the people who participated in this fraud, benefited from this fraud, and potentially orchestrated this fraud will get away with zero legal consequences,” said Daniel Frishberg in an April 24 statement. “Please do not allow Mr. Mashinsky to be one of those people. Please throw the book at him.”
Not all victims are calling for maximum punishment. One statement from Artur Abreu suggested that “despite his mistakes, Mr. Mashinsky was, at times, the more conservative voice in an industry overflowing with unchecked greed.”
Mashinsky’s defense team argues that the DOJ hasn’t taken into account his status as a nonviolent first-time offender with a previously clean 30-year history in business. They claim he’s been made a “scapegoat for every corporate action, every group decision, every unanimous vote, every market fluctuation.”
Financial Impact and Repayment
The financial impact of Celsius’s failure has been enormous. The company filed for Chapter 11 bankruptcy on July 13, 2022, owing $4.7 billion to creditors after halting withdrawals in June that year, citing volatile market conditions.
In November 2023, a US bankruptcy court approved Celsius’s restructuring plan to repay customers. By August 2024, $2.53 billion had been paid to 251,000 creditors, but many users still haven’t recovered their full investments.
The case is being watched closely within the crypto industry. Rachel Wolfson, Web3 Deep Dive podcast host, who lost access to Bitcoin worth about $5,000, stated: “The twenty-year sentence suggested by the US DOJ is fair in my opinion, as Mashinsky caused pain and suffering for many crypto investors across the globe.”
Former Celsius chief revenue officer Roni Cohen-Pavon also pleaded guilty in September 2023 to similar charges. His December 11 sentencing has been delayed until after Mashinsky is sentenced.
Mashinsky’s sentencing will be one of the first major crypto cases in the district since Jay Clayton became interim US Attorney for the Southern District of New York. Clayton, a Trump appointee and former chair of the US Securities and Exchange Commission, has been seen as a crypto proponent on many issues.
The judge will consider both the guidelines and victim statements at sentencing on May 8, weighing calls for both leniency and harsh prison time against the facts of the case.
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