Alex Mashinsky, the embattled founder and former CEO of crypto lending platform Celsius Network, has been sentenced to 12 years in federal prison for orchestrating a scheme that defrauded customers and manipulated the company’s token, CEL. The sentence, handed down on Thursday, comes nearly two years after Celsius collapsed amid a broader wave of crypto market turmoil.
Mashinsky, 58, pled guilty in December 2024 to charges of commodities and securities fraud. Prosecutors had initially filed a broader indictment, including wire fraud and conspiracy to artificially inflate CEL’s price. While the maximum sentence could have reached 30 years, the court ultimately imposed a 12-year term—significantly less than the 20 years sought by federal prosecutors, but far harsher than the one-year term requested by his defense team.
The former CEO was accused of misusing customer deposits for risky investments while simultaneously propping up CEL’s market value for personal gain. These actions, authorities said, left Celsius with a $1.2 billion hole in its balance sheet when the platform froze withdrawals in 2022, locking out thousands of users from their funds.
During the sentencing hearing, several victims urged the court to impose the harshest penalty possible, citing devastating financial losses. Mashinsky’s conviction joins a growing list of high-profile crypto fraud cases—including that of FTX founder Sam Bankman-Fried—that underscore the industry’s ongoing struggle with transparency and accountability.
Defense Calls Sentence a “Death in Prison” Amid Celsius Fallout
In a final plea ahead of sentencing, attorneys for Alex Mashinsky urged leniency, claiming that a long sentence would amount to a life term for the 58-year-old. In a May 5 letter to U.S. District Judge John G. Koeltl, the defense argued that the prosecution unfairly portrayed Mashinsky as a malicious actor, ignoring the complexity of his intentions and business decisions.
“He was not driven by cruelty, greed, or ego,” the letter read, countering the prosecution’s framing of Mashinsky as a calculated manipulator. The legal team emphasized that while Mashinsky accepted responsibility through his guilty plea, he still retained the right to present mitigating evidence and defend his character at sentencing.
Ultimately, the court handed down a 12-year sentence, marking one of the harshest penalties yet issued in connection with the crypto collapses of 2022.
Celsius filed for bankruptcy in July 2022, just weeks after halting user withdrawals amid a liquidity crisis triggered by extreme market volatility. That turbulence followed the implosion of the Terra ecosystem, whose collapse sent shockwaves through the crypto lending space. Celsius’s failure resulted in a $5 billion shortfall, affecting hundreds of thousands of retail customers.
Efforts to recover funds and return them to creditors are ongoing, with bankruptcy trustees continuing to pursue asset recoveries from former executives and institutional partners. While Mashinsky’s sentencing delivers some degree of accountability, it offers limited relief for customers still waiting for financial restitution.
Quick Facts
- Sentence: Alex Mashinsky was sentenced to 12 years in federal prison for commodities and securities fraud.
- Financial Impact: He personally profited over $45 million; Celsius’s collapse left a $1.2 billion hole in its balance sheet.
- Customer Losses: Thousands of users lost access to their funds, with many experiencing significant financial hardship.
- Regulatory Response: The case reflects increased federal enforcement against crypto fraud and investor misrepresentation.
