Former CEO Alex Mashinsky Begins 12-Year Prison Sentence After Pleading Guilty to Celsius Fraud and CEL Token Manipulation

Alex Mashinsky Begins 12-Year Prison Sentence for Celsius Fraud

Alex Mashinsky, former CEO of the collapsed crypto lending platform Celsius, is set to start a 12-year federal prison term this week after pleading guilty to two felony counts involving fraud and misleading statements about the company’s Earn Program.

Court filings state he must surrender to federal authorities by 2:00 pm ET, with the Bureau of Prisons recommending placement at the minimum-security Federal Prison Camp in Otisville, New York.

How Celsius Grew Into a Crypto Powerhouse

Celsius was once a dominant player in the crypto lending sector, managing over $25 billion in assets and attracting millions of users with promises of high returns.

Mashinsky, often seen in T-shirts declaring “Banks are not your friends,” promoted the platform as a safe and lucrative alternative to traditional banking.

The company’s growth was rapid, but its apparent stability relied heavily on opaque financial practices and risky investment strategies.

What Led to Mashinsky’s Fall

The crypto market downturn of 2022 exposed the vulnerabilities of Celsius.

The platform froze customer withdrawals, became insolvent, and filed for bankruptcy, leaving thousands of users unable to access their funds.

Mashinsky was indicted in July 2023 on seven felony counts, including commodities fraud and market manipulation tied to Celsius’s CEL token.

His legal team’s attempts to dismiss some charges failed, and by May 2025, he reached a plea deal, forfeiting all claims to Celsius during bankruptcy.

Manipulating the CEL Token and Misleading Investors

Central to the case were actions to artificially inflate the value of the CEL token.

Federal documents and internal messages reveal that Mashinsky and other executives used hundreds of millions of customer dollars to buy CEL in 2021 and 2022 without user consent, creating the illusion of a profitable company.

According to testimony, Celsius’s former chief revenue officer privately told Mashinsky,

“The ‘value’ of the CEL, as I’ve said, is fake.”

Mashinsky also personally sold CEL at inflated prices while publicly claiming he was not selling.

A Harsh Sentence Amid Calls for Justice

Prosecutors had sought a minimum 20-year sentence, calling Mashinsky a “predator” who took advantage of retail investors.

His lawyers argued for just over a year in prison, but U.S. District Court Judge John G. Koeltl sentenced him to 12 years, three years of supervised release, and ordered the forfeiture of over $48 million.

Other Executives Facing Legal Consequences

Mashinsky’s case is part of a wider crackdown on misconduct in the crypto sector.

Former Celsius revenue chief Roni Cohen-Pavon pleaded guilty to four felonies and awaits sentencing in September.

Other high-profile figures include FTX co-founder Sam Bankman-Fried, serving a 25-year sentence, Changpeng Zhao, who completed a four-month prison term, and Terraform Labs co-founder Do Kwon, awaiting sentencing after a guilty plea.

Celsius Begins Repaying Creditors After Bankruptcy

Since exiting bankruptcy in January 2024, Celsius has returned roughly $3 billion to creditors.

While Mashinsky’s imprisonment offers a measure of accountability, the financial and emotional impact on customers remains significant.

Thousands of users are still recovering from losses, highlighting the long-lasting consequences of the platform’s collapse.

Is Crypto Leadership Now Under Scrutiny

The imprisonment of a once-celebrated figure like Mashinsky signals a shift in U.S. enforcement of the digital asset sector.

Legal authorities are increasingly targeting senior executives for misleading investors and mismanaging funds, demonstrating that high-profile crypto leaders are no longer beyond the reach of federal law.