Alexander Mashinsky Faces Major Legal Consequences Over Celsius Fraud
Alexander Mashinsky, the former CEO of the now-insolvent cryptocurrency lending platform Celsius, has admitted guilt to two significant fraud charges. This admission may result in a prison sentence of up to 30 years. The US Department of Justice (DOJ) filed multiple accusations against him, initially charging Mashinsky with seven counts, including fraud, conspiracy, and market manipulation.
US Attorney Labels Celsius Fraud as One of Crypto’s Largest Scandals
Mashinsky confessed his crimes in a New York courtroom, acknowledging his involvement in commodities and securities fraud related to two deceptive schemes concerning Celsius, a company he co-founded as a supposed financial institution for the cryptocurrency sector.
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Deceptive Practices and Misleading Claims
The first scheme involved Mashinsky deceiving customers about critical aspects of Celsius’ operations, such as its profitability and the nature of investments made using customer funds. In the second scheme, allegations from the US Attorney’s Office for the Southern District of New York suggest that Mashinsky participated in illegal price manipulation of Celsius’ proprietary token, CEL. He allegedly sold his own CEL holdings at artificially inflated prices without public knowledge.
As part of his plea deal, Mashinsky has agreed to surrender over $48 million in proceeds obtained from these illegal activities. US Attorney Damian Williams characterized Mashinsky’s actions as orchestrating “one of the largest frauds in the crypto industry.” Williams further stated that Mashinsky marketed Celsius as a secure option for cryptocurrency investments, promising safety and profit returns to users—claims ultimately proven false.
Examining the Downfall of a Crypto Powerhouse
At its zenith, Celsius managed around $25 billion in assets, drawing in a substantial number of retail investors with its enticing offerings, including an “Earn” program that promised high returns for customer assets. Despite the company’s growing financial challenges, Mashinsky continued to reassure clients about the company’s stability while discreetly withdrawing significant personal assets from the platform.
Allegations of Market Manipulation
Court documents reveal that Mashinsky and other Celsius executives were involved in a “years-long scheme” to mislead customers about the value and stability of the CEL token. Authorities allege they manipulated the token’s price by utilizing customer funds to artificially boost its market value, without informing investors of these actions. This manipulation allowed Mashinsky to profit from CEL sales.
The crisis reached a peak in June 2022 when Celsius suddenly suspended all customer withdrawals, leaving hundreds of thousands of investors unable to access nearly $4.7 billion worth of their crypto assets. Shortly thereafter, the company filed for Chapter 11 bankruptcy, marking a significant downfall for one of the biggest platforms in the cryptocurrency realm.
Current Status of CEL Token
Currently, CEL is trading at $0.2690, marking a 9% increase over the past 24 hours. Despite this recent upturn, the token remains down 96% from its all-time high of $8 achieved in 2021.
