Celsius Founder Pleads Guilty to Investor Fraud in Non-Profitable Scheme
In the aftermath of the crash of 2022, Alex Mashinsky, the founder and CEO of the now defunct crypto lender Celsius, recently pleaded guilty to two fraud charges. This significant development comes after an agreement with US prosecutors, where Mashinsky agreed to return $48 million he obtained through fraudulent means, as confirmed by the US Attorney’s Office for the Southern District of New York.
Described by US Attorney Damian Williams as “one of the biggest frauds in the crypto industry,” Mashinsky had marketed Celsius with catchy slogans such as ‘Unbank Yourself,’ promising customers that their crypto assets would be as safe as money in a bank. However, unlike traditional banks, Celsius never managed to turn a profit. Despite the optimistic promises made by Mashinsky and his co-founder Daniel Leon, the company’s financials never quite delivered as expected.
Founded in 2017, Celsius quickly gained momentum in the market, amassing assets exceeding $25 billion and introducing its own cryptocurrency known as CEL, which boasted a market capitalization of over $3.2 billion in June 2021. Unfortunately, the collapse of the Terra blockchain in 2022 sent shockwaves through Celsius, leading to the suspension of withdrawals and the ultimate declaration of bankruptcy.
Following his indictment in 2023 on seven charges related to Celsius’s collapse, Mashinsky was initially slated for trial in January 2025. However, he ultimately chose to plead guilty, with sentencing now scheduled for April. Facing a potential sentence of up to 30 years in prison, Mashinsky’s guilty plea marks a significant chapter in the ongoing narrative surrounding the fall of Celsius.
In a parallel development, Roni Cohen-Pavon, Celsius’s former chief revenue officer, also pleaded guilty to similar allegations in 2023 and is set to be sentenced in the coming weeks. The repercussions of Celsius’s collapse continue to unfold, underscoring the importance of transparency and integrity in the crypto industry.
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