- DOJ pushes for 20 years in prison for Celsius founder Mashinsky
- Celsius founder profited $48 million in fraudulent crypto scheme
- Mashinsky’s sentencing to reflect severity of crypto fraud impact
The U.S Department of Justice (DOJ) demands a 20-year prison sentence for former CEO of Celsius Network Alex Mashinsky. The DOJ accuses Mashinsky of creating a multibillion-dollar fraud which resulted in major financial losses for thousands of customers. The sentencing will take place on May 8 as prosecutors stress on the need for strict punishment to protect other cryptocurrency markets from frauds.
The DOJ’s sentencing memorandum demonstrates that Mashinsky’s actions were not a mistake. The DOJ argues that his actions were a deliberate scheme to trick customers and exploit the platform for individual benefits. Celsius, valued at more than $20 billion, collapsed in 2022 and resulted in a $4.7 billion loss in customer funds. The prosecutors state that Mashinsky’s crimes led to a loss of about $7 billion at the current cryptocurrency market value.
Alex Mashinsky Pleads Guilty to Celsius CEL Token Fraud
In December 2024, Mashinsky pled guilty to deceiving customers about their investment safety and manipulation of Celsius’ CEL token for personal profits. The DOJ states that Mashinsky received $48 million from the fraudulent scheme. The federal prosecutors accuse him of spearheading a long-term plan to manipulate the price Celsius’ native token and deceive customers about their funds’ security.
The former CEO inflated prices and sold more than $48 million CEL tokens without sufficient disclosure to customers. In July 2022 Celsius was declared bankrupt which caused substantial financial losses to its users and attracted severe legal consequences. The DoJ states that a long prison term demonstrates the severity of Mashinsky’s crimes and deters future crimes in the cryptocurrency sector.
DOJ’s Severe Punishment Protects Crypto Sector
The U.S Department of Justice filed the memorandum just a week before Mashinsky’s court sentencing. The DOJ seeks a severe punishment to condemn Mashinsky and send a message to cryptocurrency executives that fraud will face severe consequences. The court will determine whether or not to issue the proposed 20-year sentence on May 8.
The Celsius fraud also involved the platform’s former chief strategy officer and co-founder Shlomi Daniel Leon. In 2022, Leon resigned from his position before the company filed bankruptcy. The Federal Trade Commission (FTC) charged Leon and other co-founders like Hanoch Goldstein with financial misconduct which resulted in a $4.7 billion loss.