Celsius Founder Alex Mashinsky Gets 12 Years in Prison—Another Crypto CEO Bites the Dust

Another day, another crypto king dethroned. Alex Mashinsky—the once-celebrated founder of bankrupt crypto lender Celsius—just got slapped with a 12-year sentence for fraud. The verdict? A brutal reminder that ’trust us, we’re decentralized’ doesn’t hold up in court.

Prosecutors painted Mashinsky as the architect of a $4.7B house of cards, luring retail investors with promises of 17% yields while allegedly hiding Celsius’ insolvency. Sound familiar? It’s the same playbook we saw with Bankman-Fried—except this time, the judge wasn’t buying the ’math is hard’ defense.

Meanwhile, Celsius creditors are still waiting for their crumbs. The platform’s bankruptcy plan promises partial repayments… in crypto, naturally. Because nothing says ’making investors whole’ like paying them back in the very thing that vaporized their savings.

So here’s the real lesson: When a CEO starts pitching yield like a late-night infomercial, maybe—just maybe—it’s time to check the fine print. Or better yet, remember that in crypto, the only thing growing faster than token prices is the prison population of its founders.

Prosecutors Demanded 20 Years, Calling Mashinsky’s Actions Deliberate and Dishonest

Mashinsky, 59, pleaded guilty in December to two counts of fraud. Prosecutors had urged the court to impose a 20-year sentence, calling him “unrepentant” and accusing him of downplaying his misconduct after entering a guilty plea.

BREAKING: Celsius founder, Alex Mashinsky, sentenced to 12 years in prison pic.twitter.com/kwwvgvQHZh

In contrast, his attorneys requested a one-year sentence, claiming he had accepted responsibility and that the company’s failure stemmed from wider market turmoil.

Judge Koeltl rejected that argument and delivered a sentence that reflected the scale of the deception.

Celsius Claimed to Disrupt Banks, but Met Its End in a Classic Bank Run

Founded in 2017, Celsius positioned itself as a people-first alternative to traditional banks, offering unusually high yields on crypto deposits. Customers could earn double-digit returns by allowing Celsius to lend their assets to institutions. The business attracted billions in crypto deposits, but cracks emerged when the broader market began to falter in mid-2022.

As crypto prices fell and a series of scandals rattled investor confidence, Celsius customers rushed to withdraw their funds. The firm was unable to meet the demand. In June 2022, it froze withdrawals and filed for Chapter 11 bankruptcy the following month, revealing a massive hole in its finances.

Celsius Used Investor Money to Prop Up Token and Pay Promised Returns

Prosecutors accused Mashinsky of knowingly misleading customers about how SAFE and profitable Celsius really was. They said he directed employees to use customer deposits to pay the high yields the company had promised. At the same time, Celsius was quietly making risky, unsecured loans behind the scenes.

In addition, Mashinsky misled investors about the company’s crypto reserves. He also falsely claimed he was not selling his personal CEL token holdings. According to prosecutors, Celsius manipulated the token’s price to maintain the illusion that the company was financially strong.

Mashinsky ultimately admitted to lying about Celsius’s financial health to attract Bitcoin deposits and misleading CEL token investors about the token’s value and his personal stake. His sentencing follows the 25-year prison term handed to former FTX CEO Sam Bankman-Fried, who is currently appealing his conviction.