Celsius Network Founder Alexander Mashinsky Sentenced to 12 Years for Defrauding Crypto Investors

Alexander Mashinsky, founder and former CEO of cryptocurrency lending platform Celsius Network, has been sentenced to 12 years in federal prison for orchestrating a large-scale financial fraud scheme that misled investors and cost many their life savings.

The sentencing was handed down by U.S. District Judge John G. Koeltl, who said Mashinsky's crimes were “extremely serious,” resulting in personal profit of over $45 million at the expense of customers who trusted Celsius as a secure platform. Some customers lost their entire savings and faced severe emotional and psychological distress.

Celsius Network filed for bankruptcy in 2022 after the crypto market crash exposed risky investments made under Mashinsky’s leadership. At the height of its operations, Celsius claimed to manage nearly $20 billion in customer deposits, positioning itself as a safe, high-yield alternative to traditional banking by offering interest on crypto deposits. However, behind the scenes, much of the customer money was funneled into speculative bets and uncollateralized loans without transparent risk disclosure.

Prosecutors accused Mashinsky of manipulating public perception and inflating Celsius' financial stability. According to statements made in court, he continuously misled investors between 2018 and 2022, promising safety and security even as the company was operating at a loss. Assistant U.S. Attorney Allison Nichols described Mashinsky as someone who “preyed on hope,” luring people with misleading assurances that their money was safe.

The collapse of Celsius has left thousands of victims with little chance of full financial recovery, even as bankruptcy proceedings continue. During the sentencing, Mashinsky appeared visibly emotional, expressing regret and referencing his modest upbringing. He recounted his early life in Ukraine, immigration to Israel, service in the Israeli military, and eventual move to the United States. “I’m truly sorry,” he said, insisting he “never meant to hurt anybody.”

Despite his apology, the court emphasized the severity of the damage done. Several victims shared their experiences during the hearing, including Cameron Crewes, a member of the victims' committee, who noted that nearly 250 Celsius users passed away before they could receive justice or any compensation. “Many people have been wiped out,” Crewes said.

In previous court filings, Mashinsky’s defense argued that the Celsius collapse was the result of the broader downturn in the crypto market during mid-2022, not intentional wrongdoing. His legal team denied that his actions were predatory or driven by personal greed.

U.S. Attorney Jay Clayton, commenting after the sentencing, said Mashinsky enriched himself while ordinary investors bore the brunt of the losses. “He made tens of millions while his customers lost billions. America’s investors deserve better,” Clayton stated. “Digital assets do not excuse deception—fraud remains fraud.”

Mashinsky’s case stands as one of the most high-profile criminal proceedings to arise from the crypto industry’s recent turbulence and underscores the legal system’s growing scrutiny of digital asset platforms.

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