Federal prosecutors have asked a U.S. court to sentence Alex Mashinsky, the founder of Celsius Network, to 20 years in prison. The DOJ claims he orchestrated a massive fraud that misled thousands of investors and resulted in billions of dollars in losses. The sentencing request follows Mashinsky’s December guilty plea to multiple fraud-related charges.
Deliberate Fraud, Not Negligence
In a sentencing memo filed late yesterday, the Department of Justice accused Mashinsky of executing a calculated scheme to enrich himself at the expense of Celsius customers. The DOJ said his crimes were not the result of mismanagement or market downturns, but “deliberate, calculated decisions to lie, deceive, and steal.”
Mashinsky was charged with misrepresenting the safety of customer deposits and artificially inflating the price of Celsius’s native token, CEL. Despite promising high yields and low risk, prosecutors said he engaged in risky trading, issued uncollateralized loans, and misused customer assets behind the scenes.
Customer Losses Estimated at $7 Billion
At its height in 2021, Celsius managed over $20 billion in crypto assets. The platform collapsed into bankruptcy in July 2022, leaving about $4.7 billion in customer funds trapped. Prosecutors now estimate the total loss at nearly $7 billion, accounting for current crypto market values.
The DOJ said Mashinsky personally gained from the fraud, selling more than $48 million worth of CEL while publicly telling customers he was holding the token alongside them. Prosecutors allege his assurances were part of a broader deception that left thousands of investors financially devastated.
Mashinsky Accused of Deflecting Blames
Despite pleading guilty, Mashinsky has not acknowledged the full extent of his wrongdoing, according to the DOJ. The memo claims he continues to shift blame onto regulators, market conditions, and even his victims. Prosecutors argue this lack of remorse justifies the maximum recommended sentence.
“Mashinsky’s refusal to take responsibility underscores the need for a significant sentence,” the DOJ stated. “It is essential to send a clear message to other crypto executives.”
One of Crypto’s Highest-Profile Fraud Cases
The Mashinsky case is one of the most high-profile fraud prosecutions in the crypto industry to date. It comes amid growing calls for regulation and oversight in the digital asset sector.
Prosecutors warned that a lenient sentence could undermine public trust and embolden others to prioritize personal gain over investor protection. Notably, the court has scheduled May 8 as the sentencing date.
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