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Alex Mashinsky, co-founder of Celsius Network, has pleaded guilty to fraud charges related to the collapse of the cryptocurrency lending company. The decision marks an important development in the ongoing legal trial regarding the massive losses of the 2022 crypto winter.
Celsius CEO Admits Guilty of Manipulating CEL’s Market Value
Celsius’s former CEO is accused of manipulating the value of the network’s CEL Token to attract investors while personally taking advantage of $42 million.
According to report of Bloomberg, Mashinsky confirmed his intention to plead guilty to two counts of commodity fraud and the scheme to artificially increase the value of CEL at a hearing in Manhattan court on Tuesday. The most serious charge could result up to a maximum sentence of 20 years in prison.
Celsius’ bankruptcy was one of the earliest warning signs of crypto winter, a downturn that has wiped out billions in market value. Celsius’ collapse follows a string of high-profile failures, including the collapse of FTX under Sam Bankman-Fried.
“Alex Mashinsky, former CEO of Celsius, was just sentenced to 30 years in prison. I reported him as a fraud for years—he even locked me out and tried to sue me twice. Celsius is a blatant Ponzi scheme,” said financial analyst Jacob King write on X (formerly Twitter).
Meanwhile, Mashinsky’s former lawyer, Roni Cohen-Pavon, admitted guilt and agreed to cooperate with authorities. By changing his plea to guilty, Mashinsky avoided a trial scheduled for January. The decision could have resulted in a lighter sentence than if convicted by a jury.
Previously, in November, a federal judge denied Celsius CEO’s request to dismiss fraud charges related to CEL Token market manipulation. The court allowed the charges under the Commodity Exchange Act and the Securities Exchange Act to proceed independently, strengthening the case against him.
Prosecutors accused Mashinsky of defrauding Celsius customers for years and orchestrating manipulative transactions to inflate CEL prices. The investigation team confirmed that the company spent hundreds of millions to buy CEL, often using customer deposits without disclosure.
According to information, Cohen-Pavon managed these transactions under Mashinsky’s direction.
“The prosecutor said Mashinsky persuaded customers while Celsius burned, pumped the value of the CEL Token and pocketed $42 million before its collapse. By July 2022, Celsius went bankrupt, filed for bankruptcy and froze $4.7 billion in customer assets,” Mario Nawfal write on X.
Continued Efforts to Repay Creditors
Last week, Celsius announced that its creditors will receive $127 million in Bitcoin or USD. Additionally, Celsius filed a lawsuit against Tether, demanding the return of more than $2 billion in Bitcoin collateral, alleging misuse of funds.
Earlier this year, Celsius settled a lawsuit with KeyFi CEO Jason Stone, who accused the company of operating as a Ponzi scheme and misrepresenting its risk management. The case is based on KeyFi’s role in managing Celsius’ investments from 2020 to 2021 under a memorandum of understanding.
Overall, Alex Mashinsky’s guilty plea marks an important turning point in the broader effort to hold executives accountable for failures that have destabilized cryptocurrency markets.
General Bitcoin News
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