Alex Mashinsky, the founder and former CEO of Celsius Network, has pleaded guilty to fraud in connection with the collapse of his once-promising crypto lending platform. In a stunning twist, Mashinsky admitted to deceiving investors by falsely claiming that Celsius was operating within the bounds of the law, when in fact, the company was making uncollateralized loans, a risky move that ultimately led to its downfall. Mashinsky now faces up to 30 years in prison, according to Reuters.
Guilty Plea Marks a Turning Point for Mashinsky
In a court session on Tuesday, Mashinsky confessed to two counts of fraud. According to Reuters, he accepted full responsibility for his actions, saying, “I said that Celsius had approval from regulators. It was false. I falsely said I was not selling my CEL tokens, I accept full responsibility for my actions.” Mashinsky’s guilty plea follows his arrest in July 2022 and is linked to the catastrophic collapse of Celsius, which filed for bankruptcy just months after freezing customer withdrawals in June 2022. The company cited “extreme market conditions,” but in reality, it was deep in financial trouble, with a $1.2 billion hole in its balance sheet.
Fraudulent Claims Were Exposed in Celsius’ Collapse
Mashinsky’s claims that Celsius would never make uncollateralized loans proved to be false, with the company engaging in high-risk lending practices. As Inner City Press reports, he had repeatedly assured customers during livestreams that Celsius was operating conservatively, avoiding unnecessary risks with its customers’ funds. “Celsius does not do non-collateralized loans… that would be taking too much risk on your behalf,” Mashinsky claimed. However, when the company filed for bankruptcy, it was revealed that Celsius had in fact engaged in uncollateralized loans, setting the stage for its ultimate downfall.
What’s Next for Mashinsky and Celsius?
Now, with his guilty plea in hand, Mashinsky faces up to 30 years in prison, a stark reminder of the legal consequences of manipulating markets and betraying investors. His sentencing is set for April 8, 2025, according to Reuters. The collapse of Celsius, following the crash of Terra/LUNA and the bankruptcy of other crypto platforms, has left many questioning the stability of the crypto market and the trustworthiness of its leaders. For Mashinsky, his legal battle may be over, but the damage done to both the crypto industry and his reputation is far from finished.