Alex Mashinsky, former CEO of failed crypto lender Celsius he pleaded guilty on two counts of fraud, which carry a combined maximum penalty of 30 years in prison.
Following the company’s collapse, the United States Department of Justice charged Maszyński with seven counts of fraud, conspiracy and market manipulation. He originally pleaded not guilty but was scheduled to go on trial in the Southern District of Recent York in January.
But at Tuesday’s hearing, Mashinsky instead pleaded guilty to one count of commodity fraud and one count of securities fraud. Mashinsky admitted to lying to Celsius customers about fundamental aspects of the business, including how their funds were used, the Justice Department alleges, as well as manipulating the price of a proprietary cryptographic token for his own financial gain.
As part of the settlement, Mashinksky agreed to forfeit $48 million in ill-gotten gains. The verdict will be delivered on April 8, 2025.
“Alexander Mashinsky orchestrated one of the largest frauds in the cryptocurrency industry,” U.S. Attorney Damian Williams said in a statement. “Today’s convictions reflect this Office’s commitment to holding fraudsters like Mashinsky accountable for their crimes.”
Founded by Mashinsky in 2017, Celsius touted itself as a new-age alternative to classic banks – as “the safest place for your crypto,” the Justice Department states.
The company accepted cryptocurrency deposits, which it either invested or borrowed to fund interest payments to customers. People were attracted by promises of interest rates as high as 17 percent of deposits – several dozen times higher than the rates offered by banks at the time. The Justice Department says Celsius had more than $25 billion in client assets at its peak.
However, in May 2022, the situation worsened. The collapse of the Terra Luna stablecoin at the same time he blew a hole worth billions of dollars on Celsius’ balance sheet, and as cryptocurrency prices plummeted, panicked customers rushed to withdraw billions of dollars worth of cryptocurrencies from their Celsius accounts. After investing in Terra Luna and other assets turned bitterthe company no longer had the funds to repay and was ultimately forced to suspend payments. In July this year, degrees Celsius declared bankruptcyretaining $4.7 billion of its clients’ funds.