Alex Mashinsky, founder of collapsed crypto lender Celsius Network, admitted that he was sentenced to 12 years in prison in a plan to deceive customers and use customer funds to deceive and manipulate tokens.
Mashinsky pleaded guilty to securities fraud and commodity fraud in December. Federal prosecutors in New York said he attracted customers with the high returns of digital deposits, while misleading their operations on Celsius and using their deposits to increase the price of its own crypto tokens.
At its peak, Celsius held $25 billion in client assets. However, the bank was burned by volatility in crypto markets in 2022, with thousands of customers unable to recover their funds after stopping their evacuation.
Mashinsky, 59, was sentenced Thursday by Mashinsky, 59. Mashinsky had previously agreed to confiscate more than $48 million, representing his personal gain from the sale of CEL tokens before crashing. His bank account was frozen by U.S. authorities after indictment in 2023.
The verdict was because US President Donald Trump proposed to the cryptocurrency industry, introduced his own tokens and softened the government's approach to enforcing and oversight of digital assets. In March, he pardoned the company behind cryptocurrency exchange Bitmex, which pleaded guilty last year to violating the Bank Secrecy Act for its controls related to anti-money laundering. In addition, the new Justice Department policy prohibits the prosecution of crypto companies against users' actions.
"The use of tokenization and use of digital assets is strong, but not a license to defraud," U.S. attorney Jay Clayton, a U.S. attorney for the southern New York region, said in a statement. "The rules for fraud still apply and SDNY will put those responsible for their crimes."
Prosecutors demanded a sentence of 20 years in prison and said in a document last month that Mashinsky was an "epic fraudster" and that "a severe sentence is necessary."
"I did something wrong, I wanted to do everything I could to achieve right," Mashinsky told the court in December, saying he was fully responsible for his actions.
In a court application last week, Masinski said the judgment should not exceed 366 days. He accused the government of making a "venom statement" to the court and said he was "a first time, a nonviolent criminal, acknowledging and taking responsibility".
The document says he was “punished and humbled” and “during daily sufferings for his misconduct and the pain he caused.”
Mashinsky was arrested and charged in 2023. His company filed for bankruptcy a year after the crypto market exploded.
Prosecutors said Mashinsky has presented Celsius as a "modern bank" but it is a "risk investment fund" and that Celsius has used some of its clients' funds to manipulate its CEL token market so that it can sell its own holdings beyond its market value.