Alex Mashinsky Pleads Guilty: Examining Celsius’s Financial Mismanagement

Alex Mashinsky, the former CEO of the bankrupt cryptocurrency lending platform Celsius, has admitted to fraud charges in the US District Court of the Southern District of New York.

In a court hearing, Mashinsky confessed to committing fraud and market manipulation. He acknowledged making false claims about Celsius’s native token, CEL, including falsely stating that the token was approved by regulators to entice people to participate in Celsius’s lending program.

Additionally, Mashinsky admitted to deceiving CEL investors by promising not to sell the tokens, a promise he ultimately broke. As part of an agreement to reduce his charges from six to two, he pled guilty to commodities fraud and securities fraud.

Initially pleading ‘not guilty’ and posting a $40 million bond with travel restrictions, Mashinsky’s legal team changed tactics after failing to have the charges dismissed. As a result, he now faces up to 30 years in prison for his offenses. Former Chief Revenue Officer Roni Cohen-Pavon also pleaded guilty to four charges related to price manipulation of CEL.

Celsius Network, established in 2017 by Daniel Leon, Nuke Goldstein, and Alex Mashinsky, was once a prominent DeFi company managing around $12 billion in assets. However, the company floundered in 2022 due to adverse crypto market conditions, undervaluing the overall cryptocurrency market and leading Celsius to file for Chapter 11 bankruptcy. Reports indicated that internal mismanagement, including using customer deposits for Bitcoin mining and futures investments, also contributed to Celsius’s collapse.

A severe liquidity crisis forced Celsius to freeze withdrawals at one point, resulting in a significant shortfall and ultimately the company’s bankruptcy.