Alex Mashinsky, founder and former CEO of Celsius, has pleaded guilty to two counts of fraud. His lawyers also agreed not to appeal his 30-year prison sentence, but it is unlikely that Mashinsky will remain behind bars for the full term. Mashinsky admitted that he had misled investors about Celsius' regulatory status. All the while, he made US$42 million by selling off CEL tokens at artificially inflated prices.
About three years have passed since then, and the horror of the virtual currency in 2022 is starting to subside.
Many will remember the FTX collapse in November 2022 as the main disaster that started a long and difficult crypto winter. But in reality, the dominoes had already begun to fall earlier that year, when TerraUSD was decoupled from the dollar and financial company Celsius went bankrupt.
After a lengthy legal process, Celsius founder and former CEO Alex Mashinsky pleaded guilty to two counts of fraud (out of seven indictments).
Having agreed to a 30-year prison sentence, the crypto world may finally begin to recover as the industry's most exploitative tycoons continue to face their music.
Celsius co-founder Alex Mashinsky plans to plead guilty to two counts of fraud in one of the last cases stemming from the massive disruption that rocked digital currencies two years ago. https://t.co/XK43M71F7w
— Bloomberg (@business) December 3, 2024
Related: Swipe Right to Scam: Overseas Call Center Busted in Aussie Hearts Cryptocurrency Scam
Billions of dollars lost to customers due to Celsius collapse
Celsius Network was one of the largest and early lenders on the blockchain scene, offering attractive yields on digital asset deposits. This mechanism was quite similar to a high-interest savings account, unlike DeFi lenders, which typically utilize proof-of-stake and liquidity pools to generate passive income.
This meant that Celsius was ultimately an unregulated, centralized bank, something that CEO and founder Alex Mashinsky exploited.
As global interest rates and inflation began to rise in the wake of the coronavirus disease (COVID-19) pandemic, many technology companies' fortunes became a little precarious.
By July 2022, Celsius' position was no longer tenable, and the company filed for Chapter 11 bankruptcy after a bank run on its customers.
All told, Celsius owed investors around US$4.7 billion (A$7.27 billion).
Mashinsky intentionally deceives investors and manipulates CEL token market
But before the saying got to fans, Mr. Mashinsky and Celsius' chief revenue officer took advantage of their positions of power. Specifically, both parties held large amounts of CEL, Celsius' native token.
Earlier this week, Mashinsky admitted to lying to investors about Celsius' regulatory status and assuring customers that they were approved for an “acquisition” program.
In reality, no such approval had taken place.
Celsius founder Alex Mashinsky has finally pleaded guilty to two counts of fraud and now faces up to 30 years in prison. However, it was clear from one conversation that he was a fraud. Why did it take authorities so long to uncover the obvious facts? pic.twitter.com/sxWpXffcPq
— Peter Schiff (@PeterSchiff) December 4, 2024
(You know how things get worse when you agree with Peter Schiff…)
To make matters worse, Mashinsky steadily sold off a large portfolio of CEL without informing investors of information that would have had a significant impact on the token's popularity.
All told, the court believes the former CEO pocketed profits worth approximately US$42 million (A$65 million).
At the court hearing, Mashinsky admitted his actions.
I know what I did was wrong and I want to do everything I can to make it right.
Alex Mashinsky, former CEO and founder of Celsius
