Crypto-entrepreneur Alex Mashinsky receives a sentence of 12 years in prison for perpetrating a cryptocurrency fraud.
Breaking: Alex Mashinsky, Ex-Celsius Network Chief, Nailed with a 12-Year Stint
NEW YORK — Yesterday, Alex Mashinsky, the mastermind behind the defunct cryptocurrency lending giant, Celsius Network, was hit with a 12-year prison sentence. The ruling came from U.S. District Judge John Koeltl, in the heart of Manhattan—one of the sternest sentences to date in the fallout from the 2022 cryptocurrency market crash.
Sam Bankman-Fried, the ex-head of the FTX exchange, is currently serving a 25-year sentence following fraud convictions. He's appealing the verdict.
The legal eagles had it in for Mashinsky, who allegedly swindled clients by misrepresenting Celsius’ security and artificially boosting the value of Celsius’ proprietary token, Cel. Federal prosecutors vehemently argued for a minimum of 20 years, dubbing it a fitting retribution for duping thousands and accruing billions in losses, while raking in over $48 million in personal profits.
U.S. Attorney Jay Clayton in Manhattan made it clear: "The case for tokenization and the use of digital assets is promising, but it's no free pass for duping folks."
Mashinsky sought leniency, expressing remorse and a desire to make amends for his actions towards his family and former Celsius customers. The sentence includes three years of probation and a $48.4 million forfeiture. His legal squad wasn't available for comment.
Established in 2017, Celsius—located in Hoboken, New Jersey—filed for Chapter 11 bankruptcy in July 2022. Account holders seemingly panicked as cryptocurrency prices plummeted, causing a mad dash to withdraw deposits.
Born in Ukraine, Mashinsky emigrated to Israel with his kin, then relocated to the Big Apple after a visit in 1988. Crypto lenders, such as Celsius, typically offered lucrative interest rates and easy loan access to depositors, while loaning tokens to institutional investors, banking on the difference.
Celsius promised an impressive 17% interest on certain deposits, but their books were far from that rosy picture. The company had a balance sheet deficit of $1.19 billion when they filed for bankruptcy protection.
Mashinsky's legal troubles aren't limited to these criminal charges. He's also braceing himself for four civil suits—from the U.S. Securities and Exchange Commission, U.S. Commodity Futures Trading Commission, U.S. Federal Trade Commission, and New York Attorney General Letitia James.
[1] https://www.justice.gov/usao-sdny/pr/former-ceo-celsius-network-sentenced-12-years-prison
[2] https://www.bloomberg.com/news/articles/2022-12-18/former-celsius-network-ceo-gets-12-years-in-prison-for-securities-fraud
[3] https://fortune.com/2022/12/16/alex-mashinsky-celsius-network-sentencing/
- Despite expressing remorse and the impending forfeiture of $48.4 million, Alex Mashinsky, the ex-CEO of Celsius Network, was sentenced to 12 years in prison for securities fraud.
- This sentence follows the conviction of Sam Bankman-Fried, the former head of FTX exchange, who is currently serving a 25-year sentence following fraud convictions.
- The future of digital asset finance may face increased scrutiny as General-news and Crime-and-justice sections regularly report on suspected misdeeds, such as Mashinsky's tokenization of Celsius' Cel token and the alleged loss of billions for thousands of clients.
- Mashinsky's legal troubles extend beyond the criminal charges, as he also faces four civil suits from various U.S. regulatory agencies, including the SEC, CFTC, FTC, and New York Attorney General Letitia James.
