Celsius Founder Alex Mashinsky Gets 12 Years for $48M Fraud—Crypto’s ’Trust Us’ Era Takes Another Hit

Another crypto kingpin falls—Alex Mashinsky, the smooth-talking founder of Celsius, just got slapped with a 12-year prison sentence for pilfering $48M from investors.

Remember when ’decentralized finance’ meant freedom? Turns out some folks just wanted freedom from accountability. The judge threw the book at him, proving even blockchain trails can’t outrun handcuffs.

Bonus irony: Mashinsky’s ’unbank yourself’ mantra now comes with complimentary prison orange. Maybe stick to FDIC-insured savings accounts next time, folks.

Mashinsky pleads for sympathy

The sentence fell short of the 20-year term requested by the Department of Justice, which called it a just punishment. Mashinsky disagreed, and his lawyers, in a May 5 filing, described the DOJ’s request as a ‘death-in-prison’ sentence. They argued that Mashinsky never intended to harm customers or steal their money.

His legal team attempted to elicit sympathy by highlighting the persecution his Jewish family faced in Soviet Russia and his military service in the Israeli Defense Forces. However, the judge did not take those factors into consideration during sentencing.

Celsius was a crypto lender that promised high interest rates while touting the safety of its investments. On some deposits, they gave out 17% in interest, much higher than the market rate. At its height, the firm claimed it had 1.7 million users, managed $11.7 billion worth of assets, and gave out $8 billion in loans.

But in 2022, as the crypto market faced extreme volatility, Celsius’s operations began to unravel. Instead of secure loans, the firm had engaged in highly leveraged trading strategies. When markets turned, those positions collapsed, leaving Celsius insolvent and its depositors with billions in losses.