Alex Mashinsky, the former CEO of Celsius Network, was sentenced to 12 years in prison on May 8, 2025, for orchestrating a massive fraud scheme that defrauded investors of billions.
The sentencing, handed down by U.S. District Judge John G. Koeltl in Manhattan’s Southern District, marks a significant moment in the ongoing crackdown on cryptocurrency fraud.
Mashinsky’s case, which unfolded in courtroom 14A at 500 Pearl Street, underscores the risks of unchecked activities in the volatile crypto industry.
Mashinsky, once celebrated as a visionary behind Celsius Network—a platform touted as a safer alternative to traditional banking—pleaded guilty to two counts of fraud in December 2024.
Prosecutors revealed that he misled investors about the safety and profitability of Celsius’s yield-generating platform while covertly selling off millions in personal holdings.
This deception contributed to the company’s collapse in 2022, leaving hundreds of thousands of retail investors unable to access roughly $4.7 billion in crypto-assets when Celsius halted withdrawals and filed for bankruptcy.
The case parallels the downfall of other crypto moguls, including FTX’s Sam Bankman-Fried, who is serving a 25-year sentence for misappropriating customer funds, and Binance‘s Changpeng Zhao, who faced penalties for enabling money laundering.
Terraform Labs’ Do Kwon, linked to a $40 billion collapse, also settled with the SEC for $4.5 billion.
Mashinsky’s sentencing follows a $4.7 billion settlement between Celsius and the Federal Trade Commission, one of the largest in the agency’s history, though it remains contingent on the company returning remaining customer assets through bankruptcy proceedings.
Prosecutors painted Mashinsky as a calculated fraudster who lured investors with promises of high returns and minimal risk.
Through media appearances, social media, and weekly “Ask Mashinsky Anything” broadcasts, he promoted Celsius as a secure “bank” for crypto.
In reality, the company had allegedly engaged in risky investments, including uncollateralized loans and speculative bets tied to the 2022 collapse of Terra and Luna cryptocurrencies.
These practices, coupled with Mashinsky’s manipulation of Celsius’s proprietary CEL token—through which he personally profited $42 million—devastated investors.
Despite initially denying wrongdoing, Mashinsky’s guilty plea reflected a shift in tone.
He disgraced former Celsius CEO stated in court:
“I know what I did was wrong, and I want to do whatever I can to make it right.”
His defense team argued for a lenient one-year sentence, citing his lack of malevolent intent, but prosecutors pushed for 20 years, emphasizing the scale of the fraud and its impact on retail investors.
Judge Koeltl’s 12-year sentence, comprising concurrent 120-month and 144-month terms, appears to have struck a balance between the two.
The Celsius collapse was a domino in the 2022 “crypto winter,” triggered by the spectactular Terra/Luna crash and exacerbated by the failures of firms like Three Arrows Capital and Voyager Digital.
As the Bitcoin (BTC) and crypto industry rebounds, with digital currency prices surging amid optimism over seemingly pro-crypto policies, Mashinsky’s sentencing serves as a reminder of the sector’s vulnerabilities.
It also reinforces the resolve of regulators, including the SEC and CFTC, to hold executives accountable for betraying investor trust.