Prosecutors Seek Up to 20 Years in Prison for Celsius Founder Alex Mashinsky

Prosecutors have asked a judge to sentence Celsius Network founder Alex Mashinsky to 20 years for his role in a multibillion-dollar fraud.

The US Department of Justice (DOJ) called Mashinsky the architect of a “years-long campaign of lies and self-dealing” that left customers with billions in losses.

Alex Mashinsky Facing 20 Years In Prison

On April 28, the Department of Justice filed the government’s sentencing memorandum against former Celsius boss Alex Mashinsky ahead of his sentencing next week. In the memo, the DOJ said the Celsius founder should face “just punishment for his years-long campaign of lies and self-dealing that left in its wake billions in losses and thousands of victimized customers.”

The filing contends that Mashinsky “misrepresented how Celsius handled customer deposits, fabricated the company’s profitability, and placed his customers’ funds at the mercy of uncollateralized loans and undisclosed market bets.”

The memo highlighted that Celsius users were unable to access approximately $4.7 billion in digital currency assets after the platform suspended withdrawals in mid-June 2022.

Mashinsky pleaded guilty to two counts in December, including commodities fraud and conspiracy to manipulate the price of the CEL token.

Mashinsky, who was apprehended in July 2023, “refuses to accept responsibility” for his crimes and continues to shift blame to regulators, market conditions, and even his victims, prosecutors asserted.

The DOJ says that his crimes sparked nearly $7 billion in customer losses, while he personally profited by more than $48 million.

“His crimes were not the product of negligence, naiveté, or bad luck. They were the result of deliberate, calculated decisions to lie, deceive, and steal in pursuit of personal fortune,” the Tuesday memo reads.

At its peak in 2021, Celsius handled over $20 billion in customer funds. Mashinsky vigorously touted the platform as a safe alternative to traditional banking institutions, promising high returns and low risk.

Prosecutors claim those promises were a hoax: Celsius took uncollateralized loans, made risky trades, and discreetly used customers’ crypto assets to manipulate the price of CEL, all while publicly assuring clients their funds were completely safe.

DOJ Cites Sam Bankman-Fried’s Verdict For Reference

The sentencing memo also cited previous cases in the United States, including the 25-year jail sentence for disgraced FTX founder Sam Bankman-Fried.

According to the prosecutors, while Bankman-Fried was in his 20s and argued that his conduct was attributable to youth and inexperience, Mashinsky, who is currently in his 60s, was old enough to know he was committing crimes.

“The 25-year sentence for Bankman-Fried is therefore a meaningful data point for the Court to consider,” wrote prosecutors, adding that a 20-year prison term for Mashinsky would reflect the gravity of his crimes and deter other cryptocurrency executives from pursuing personal enrichment at the expense of their clients.