Alex Mashinsky, the founder and former CEO of the Celsius Network has pleaded guilty to the fraud charges against him. He intends to plead guilty to two charges against him: one for commodities fraud and another for manipulating the price of the Celsius token. The charges against him are serious and warrant upto 20 years imprisonment.
Mashinsky was indicted on seven charges on July 13, 2023. The charges included conspiracy, market manipulation, and fraud. He had initially pleaded not guilty to these charges but has changed his plea since then.
According to the authorities, Alex Mashinsky committed securities fraud related to two different schemes. As per the first charge, Mashinsky gave false information to the customers of Celsius Network about the company’s financial state and the way it managed customer funds. The second charge is regarding market manipulation. Mashinsky is said to have manipulated the market of CEL tokens by selling his own token holdings at an inflated price.
Mashinsky’s Statement In The Court
Mashinsky has admitted before the court of law that he had misled the Celcius Network customers by providing them falsely comforting data. In a 221 interview, he falsely stated that the Celsius Network’s Earn Program had regulatory approval for using customer crypto assets to generate results.
Mashinsky also admitted in the court that he did not disclose details about the sale of the CEL tokens from his holding. He stated in the court that he had full knowledge of the incorrectness of his deeds. He also said that he is ready to take complete responsibility for his actions.
US Attorney About Mashinsky’s Fraud
According to US Attorney Damian Williams, this is one of the largest scams in the history of cryptocurrency trade. Mashinsky cheated ordinary investors into investing their hard-earned money with the Celsius Network by giving them false promises of their investments being low-risk.
To further mislead the investors and hide the flaws of the company from the public, Mashinsky invested the customers’ money into riskier bets and used it to maintain high prices for the CEL tokens. Mashinsky is accused of having made millions of dollars by selling his holding of Mashinsky tokens for inflated prices. However, his customers contracted heavy losses when the company ultimately went bankrupt.
During the initial stages of its development, the company had given high interest rates to its customers. However, when the financial state of the Celsius Network was depleted after the collapse of the TerraUSD stablecoin and the subsequent downfall of the cryptocurrency market, the company became incompetent to meet the requirements and withdrawal requests of its customers. Eventually, this caused the business to go bankrupt.
As per the Attorney, Mashinsky had lured customers to the Celsius network through slogans such as “Unbank Yourself” that gave false promises to the users that their crypto assets would be safer with the company than the ordinary money deposited in banks.
He had also conducted promotion campaigns to promote his fraudulent company through media interviews, his social media accounts, and Celsius’ website. He also hosted an “Ask Mashinsky Anything” session every week, which was broadcast through the Celsius website and its YouTube channel.
The indictment against Alex Mashinsky also stated that he ignored the warnings from his employees of the consequences of spreading false, misleading information.
The Final Verdict
The indictment against Alex Mashinsky states that he had filed a plea agreement with prosecutors for him to be sentenced to upto a 30-year term and be fined a penalty of up to $48 million. This is the amount of money he had made through fraud attempts using the Celsius Network.
The final verdict against Alex Mashinsky is expected to be pronounced on April 8, 2025. This verdict would make history in the cryptocurrency industry and will be viewed as an exemplary punitive measure for financial fraud of such magnitude. This sentence is expected to restore the reputation of the crypto industry, which was tarnished by a financial fraud of such magnitude orchestrated by a single entity.
