Alex Mashinsky, the founder of the now-bankrupt crypto lender Celsius Network, could face 20 years behind bars after U.S. prosecutors called for a harsh sentence over what they describe as a calculated and deliberate fraud that inflicted billions of dollars in losses on thousands of investors.
U.S. Prosecutors Seek Heavy Sentence
In a memo filed Monday, the U.S. Department of Justice (DOJ) urged a federal judge to impose a 20-year prison sentence on Mashinsky. Prosecutors argued that Mashinsky “refuses to accept responsibility” despite overwhelming evidence of guilt and a previous guilty plea.
“He has abandoned all pretense of acknowledging his sustained wrongdoing, and he does not even feint at contrition,” prosecutors stated. “Instead, he claims he was motivated by a selfless devotion to service, his only mistakes excessive enthusiasm for Celsius and trusting the wrong executives.”
Mashinsky pleaded guilty in December 2024 to charges of misleading customers about the safety of their deposits and secretly manipulating Celsius’s CEL token.
The Fall of Celsius
Celsius, once one of the largest crypto lending platforms, froze customer withdrawals in June 2022 as liquidity issues mounted. Just a month later, the firm filed for bankruptcy, revealing it had only $167 million left to repay customers a fraction of the billions it owed.
Investigations revealed that Mashinsky and his wife had reportedly withdrawn around $12 million in crypto from Celsius accounts shortly before the company’s collapse, further fueling accusations of insider misconduct.
Launched in 2018, Celsius grew rapidly to manage nearly $10 billion in crypto assets by 2021, boasting around 200 employees at its peak. However, risky business practices and alleged misrepresentations to customers ultimately led to its downfall.
Victims Demand Justice
Ahead of Mashinsky’s sentencing, more than 200 victim statements were submitted to the court, many calling for harsh penalties.
- Brandon Lawrence, a Celsius investor, said the collapse of Celsius tarnished not only his financial ambitions but also his trust in the broader cryptocurrency industry.
- Stephen Levenberg, a retired teacher and victim of the collapse, expressed that he would be willing to accept a lighter sentence if the stolen funds were returned, but stressed the profound impact of the losses on his life.
Sentencing Date Set
Alex Mashinsky’s sentencing is scheduled for May 8, 2025, before Judge John G. Koeltl in federal court.
The case is seen as one of the most significant fraud prosecutions to emerge from the 2022 crypto market collapse and could set a precedent for how future crypto-related fraud cases are handled by U.S. courts.
