Alex Mashinsky, the former CEO of Celsius Network, has been sentenced to 12 years in federal prison for defrauding crypto investors and manipulating the price of the CEL token.
One of the Largest Crypto Fraud Cases in History
According to Inner City Press, the Southern District Court of New York handed down the sentence on May 8. Judge John G. Koeltl stated that Mashinsky’s actions caused thousands of investors to lose their life savings and suffer emotional distress.
Prosecutors described the case as “one of the largest frauds in the cryptocurrency industry.”
Mashinsky, now 59, pleaded guilty in December 2024 to two major charges: commodities fraud and market manipulation of CEL — Celsius Network’s native token. Authorities arrested him in 2023, accusing him of misleading users about the company’s profits and business model. Additional charges included securities fraud and wire fraud.
Defense Failed to Convince the Court
During the trial, Mashinsky’s legal team asked for a reduced sentence of 366 days, citing his difficult childhood in Ukraine and his military service in Israel. His lawyers also portrayed him as a dedicated father of six who made “legitimate efforts” that later went wrong.
Prosecutors, however, pushed for a 20-year sentence. They highlighted the scale of financial damage and the intentional deception involved in the scheme.
Eventually, Judge Koeltl settled on a 12-year sentence. He also ordered Mashinsky to report to prison by September 12. However, the judge allowed him to attend his daughter’s wedding in Memphis later this month, pending approval from probation authorities.
From Tech Entrepreneur to Crypto Criminal
Born in 1965 in Ukraine, Mashinsky moved to Israel in the 1970s and served in the Israeli army from 1984 to 1987. He later relocated to New York in 1988 to start his career as a tech entrepreneur.
Mashinsky founded eight companies, including Arbinet and Transit Wireless, and claimed credit for inventing Voice over Internet Protocol (VoIP). With over 50 patents and billions in raised capital, he became known as a symbol of tech innovation.
However, his ambitions at Celsius led to one of the most infamous collapses in crypto history.
Celsius Network’s Rise and Fall
Founded in 2017, Celsius promised users a new kind of crypto banking experience. The platform allowed customers to earn high interest rates — up to 18% — on crypto deposits and borrow against their digital assets.
Its slogan, “Unbank Yourself,” positioned Celsius as a safer alternative to traditional finance. At its peak, the company managed $25 billion in assets.
Behind the scenes, though, Mashinsky allegedly used customer funds for risky investments and manipulated CEL’s price to create a false sense of stability.
He reportedly sold off large amounts of CEL at artificially inflated prices, making $48 million in personal profits. Meanwhile, the company operated at a loss and took on unsecured loans.
In June 2022, Celsius abruptly froze withdrawals, locking up around $4.7 billion in customer assets. A month later, the firm filed for Chapter 11 bankruptcy. By 2024, Celsius had officially dissolved. Part of its remaining assets now fund a new Bitcoin mining company called Ionic Digital.
CEL Token Remains Weak
The CEL token currently trades at $0.1036, up 9.4% in the last 24 hours. However, its market cap has dropped to just $3.7 million. Since launch, CEL has lost over 52% of its value.
A Harsh Lesson for the Crypto Industry
Mashinsky’s sentencing is the latest in a series of high-profile crypto scandals. The collapse of Celsius followed the 2022 crypto winter, during which firms like FTX, Voyager Digital, and Three Arrows Capital also went bankrupt.
Sam Bankman-Fried, former CEO of FTX, received a 25-year sentence for stealing $8 billion from customers. These cases highlight the urgent need for stronger regulation and more transparency in the crypto sector.
Although Bitcoin and other digital assets have bounced back recently — partly due to optimism surrounding President-elect Donald Trump’s pro-crypto stance — investor confidence remains fragile.
Former Celsius founder Alex Mashinsky gets 12 years prison for crypto fraud. The Celsius case serves as a powerful reminder: high returns often come with high risks. Investors must stay cautious and thoroughly vet platforms before trusting them with their money.
