Alexander Mashinsky Sentenced To 12 Years For Defrauding Celsius Investors

Alexander Mashinsky, the former leader of Celsius Network, received a 12-year prison sentence after he entered a guilty plea to two counts of fraud. The decision, delivered by U.S. District Judge John G. Koeltl at the Southern District courthouse in Manhattan, marked a significant fall from grace for a man once seen as a pioneering figure in cryptocurrency banking.

The court noted that Mashinsky’s conviction stemmed from his involvement in a deliberate plan to deceive investors. He admitted to committing commodities fraud and participating in a conspiracy involving the Celsius token, actions that seriously misled the public and damaged trust in the platform.

Court Highlights Fraud And Sentencing Trends In Crypto Cases

The sentencing took place in courtroom 14A at 500 Pearl Street, a location known for dealing with major cases involving crypto executives. Authorities pointed out that Mashinsky’s legal problems began when he was charged with securities, commodities, and wire fraud.

This came shortly after Celsius settled for billions with the Federal Trade Commission, which required them to return customer funds through bankruptcy. Prosecutors said Mashinsky lied about the risks and returns of Celsius’s platform while secretly selling off a lot of his own assets.

Mashinsky’s guilty plea and sentencing ended a case also pursued by the Securities and Exchange Commission and the Commodity Futures Trading Commission. Both agencies accused Mashinsky and Celsius of running a massive fraud.

Mashinsky’s case was compared to other high-profile crypto leaders. Sam Bankman-Fried, founder of FTX, received a 25-year prison sentence for fraudulent activities that caused the collapse of his company. It was revealed that Bankman-Fried used customer deposits to fund his extravagant lifestyle.

Authorities Report Different Sentences For FTX Insiders And Binance’s Ex-Executive Officer

Caroline Ellison, who worked with Bankman-Fried at Alameda Research, received a two-year sentence. Authorities said her cooperation helped build a strong case against the FTX leadership. Other FTX figures received lighter sentences. Ryan Salame got 90 months with supervised release, while Nishad Singh and Gary Wang avoided jail time and were placed on supervised release.

Meanwhile, the FTX estate confirmed that most affected customers would get their funds back, with extra compensation. A judge dismissed most lawsuits against public figures who endorsed FTX, including Tom Brady, Gisele Bündchen, Kevin O’Leary, and Stephen Curry.

Changpeng Zhao, the former Chief Executive Officer of Binance, settled with U.S. authorities after a lengthy investigation. He stepped down from his role and received a four-month sentence for allowing illegal financial activities on the platform. Zhao served his sentence in a minimum-security prison.