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Alex Mashinsky, founder and former CEO of Celsius Network, pleaded guilty on Tuesday to two counts of fraud related to the manipulation of its native token, CEL, and making false statements regarding the regulatory approval of its “Earn” program. This statement marks a turn in the case that emerged following the collapse of the Cryptocurrency lender in 2022.
During a hearing before federal Judge John Koeltl, Mashinsky admitted to providing “false comfort” to Celsius clients by claiming, in a 2021 interview, that the Earn program had received regulatory approval, which was not true. In addition, he admitted to having sold his CEL holdings without informing clients, while the inflated profits from said token benefited his personal finances.
Case Details and Legal Agreements
Mashinsky was initially charged with seven counts in July 2023, including fraud and market manipulation. By pleading guilty to two of those charges, he agreed not to appeal any sentence less than 30 years, the maximum sentence he could face. His sentencing is scheduled for April 8, 2025.
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According to prosecutors, Mashinsky generated approximately $42 million by selling his CEL holdings at artificially high prices, while clients faced massive losses following Celsius’ bankruptcy. The platform filed for bankruptcy in July 2022 and has recently shifted its focus towards Bitcoin Mining.
Manhattan prosecutor Damian Williams stressed in a statement that “Mashinsky made tens of millions of dollars by selling CEL at inflated prices, while his clients were left stuck with significant losses when the company collapsed.”
The rise and fall of Celsius Network
Founded in 2017, Celsius grew rapidly during the pandemic-fueled cryptocurrency boom, offering easy loans and attractive interest rates to depositors. However, the fall in cryptocurrency prices in 2022 triggered a liquidity crisis that led to its bankruptcy. Many customers faced blocks in accessing their funds.
Mashinsky is not the only crypto sector leader to face legal charges. In 2023, Sam Bankman-Fried, founder of FTX, was sentenced to 25 years in prison after being found guilty of stealing approximately $8 billion from his clients.
The impact on the crypto market
The Mashinsky case comes at a time when prices of cryptocurrencies, such as Bitcoin, have recovered significantly, in part due to optimism generated by the cryptocurrency-friendly policies expected under the administration of President-elect Donald Trump.
Meanwhile, Roni Cohen-Pavon, former chief revenue officer at Celsius, also pleaded guilty in 2023 and is cooperating with ongoing investigations, underscoring the magnitude of regulatory and legal scrutiny facing cryptocurrency companies following the collapse of several platforms. important.
Mashinsky stated at the hearing: “I know what I did was wrong and I want to do everything I can to make it right.” This acceptance of responsibility could offer some relief to those affected, but it also leaves important lessons about the need for greater transparency and regulation in the crypto sector.
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