Celsius Founder Faces 20-Year Sentence as DOJ Exposes $7B ’Deliberate’ Crypto Fraud
Another ’trust us with your money’ crypto genius meets the long arm of the law—this time, with a side of prison orange.
The DOJ’s indictment reads like a blockchain horror story: $7 billion vanished, investors left holding the bag, and all while the founder allegedly knew the house of cards was collapsing.
Pro tip for aspiring crypto moguls: When your business model relies on ’faith’ instead of audited reserves, maybe skip the private jet purchases.
DOJ urges 20-year sentence for Mashinsky over deliberate fraud scheme
In the memo filed late Monday, the DOJ urged the court to send him to prison for at least 20 years, calling his crimes a “deliberate, calculated” fraud scheme that ruined the savings of thousands of people and led to nearly $7 billion in losses to customers.
Earlier, prosecutors claimed that Mashinsky, who entered a guilty plea in December for manipulating Celsius’s CEL token and falsely representing the security of customer deposits, refused to take accountability for his crimes and blamed his victims, regulators, and market forces.
Additionally, based on their argument concerning Mashinsky’s crime, they wrote that his crimes were not the result of a lack of wisdom, negligence, or misfortune. They revealed that they were the outcome of conscious, well-thought-out choices to steal, lie, and deceive to increase one’s wealth.
This all began in 2021 when Celsius was managing over $20 billion in customer cryptocurrency assets at its peak—driven largely by Alex Mashinsky’s aggressive promotion of the platform as a low-risk, high-yield alternative to traditional banking.
However, prosecutors claimed that those assurances were false, claiming that Celsius had publicly assured customers that their money was secure while engaging in risky trading, taking out uncollateralized loans, and covertly using customer assets to manipulate the price of its CEL token.
Federal prosecutors in Manhattan accused Mashinsky and Celsius’s former chief revenue officer, Roni Cohen-Pavon, of manipulating the market for the company’s crypto token. Cohen-Pavon pleaded guilty in September 2023 and agreed to cooperate with the prosecutors’ investigation.
While Mashinsky emerged as a key figure in the Celsius fraud, others were also involved in the massive cryptocurrency scam, including Shlomi Daniel Leon, who co-founded Celsius with Mashinsky in 2017.
Formerly Celsius’s chief strategy officer (CSO), Leon quit his job in October 2022, months after Celsius’ collapse in June.
In July 2023, the Federal Trade Commission charged Leon, along with Mashinsky and another co-founder, Hanoch Goldstein, and issued a $4.7 billion fine against the bankrupt lender.
Mashinsky led a $7 billion loss for clients
Prosecutors claimed that Mashinsky personally sold more than $48 million worth of CEL at inflated prices while claiming to be “HODLing” with his customers. In July 2022, Celsius filed for bankruptcy, trapping roughly $4.7 billion in customer funds.
Following bankruptcy, clients faced a deficit of more than $1 billion. Prosecutors calculate the overall loss to be closer to $7 billion after accounting for the current cryptocurrency prices following the “Trump-trade” rally in 2024.
To wrap up the necessary action regarding Mashinsky’s act, anything less than a substantial prison term, according to the prosecution, would not adequately convey the seriousness of Mashinsky’s actions, erode legal respect, and send the wrong message to other cryptocurrency executives who might be tempted to pursue their own financial gain at the expense of their clients.
Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot
