After FTX, Celsius Network Founder Pleads Guilty to Fraud

Following the FTX saga, Alex Mashinsky, the former CEO and founder of Celsius Network, has pleaded guilty to two counts of fraud. The admission came during a hearing before U.S. District Judge John Koeltl in Manhattan on Tuesday. Mashinsky, 59, now faces up to 30 years in prison under the terms of his plea deal.

Celsius Network Founder Found Guilty

Mashinsky was initially indicted in July 2023 on seven charges, including crypto fraud, conspiracy, and market manipulation. Federal prosecutors accused him of misleading investors about Celsius’ operations and inflating the value of the company’s proprietary token, CEL. On Tuesday, he pleaded guilty to commodities fraud and manipulating CEL’s price.

During the hearing, Mashinsky confessed to deceiving Celsius users. He admitted that in a 2021 interview, he falsely claimed the company’s “Earn” program had received regulatory approval. “I gave customers false comfort,” Mashinsky stated, acknowledging his role in misleading them, according to a Reuters report.

He also admitted to failing to disclose his own CEL token sales. “I know what I did was wrong, and I want to try to do whatever I can to make it right,” Mashinsky told the court. Prosecutors have alleged he earned approximately $42 million from selling his holdings in CEL.

Celsius Network, founded in 2017, became one of the major players in the crypto lending space, offering high-interest returns to depositors. However, the company faced significant financial trouble in 2022 as the cryptocurrency market plummeted.

Rising interest rates and persistent inflation triggered a wave of withdrawals that Celsius could not meet, leading to its bankruptcy filing in July 2022. Customers were left without access to their funds during this period.

FTX, Celsius in Scrutiny Amid Crypto Crackdown

Mashinsky is not the only Celsius executive to face legal trouble. Roni Cohen-Pavon, the company’s former chief revenue officer, admitted to his role in manipulating CEL prices in September 2023. Cohen-Pavon has since agreed to cooperate with federal prosecutors.

Mashinsky’s case is part of a broader crackdown on prominent figures in the crypto industry. The market downturn of 2022 led to a series of collapses, including the high-profile bankruptcy of FTX. Its founder, Sam Bankman-Fried, was convicted in 2023 of misappropriating $8 billion in customer funds and sentenced earlier this year to 25 years in prison.

Celsius exited bankruptcy in January 2024 and has since shifted its focus to Bitcoin mining. The company was among the first crypto firms to fail in 2022, followed by others like Voyager Digital and Three Arrows Capital.

Mashinsky’s sentencing date has yet to be set. Nonetheless, under the terms of his plea deal, he cannot appeal a sentence of 30 years or less.