Alex Mashinsky, disgraced founder of bankrupt crypto lending firm Celsius, stole $48 million from customers.
A landmark case of crypto fraud reached its conclusion. On Thursday, May 8, Celsius founder Alex Mashinsky was sentenced to 12 years in prison for his role in the firm’s bankruptcy, which cost its users billions.
According to the prosecution, Mashinsky victimized thousands of people, many of whom lost their life savings. At the same time, the disgraced founder stole more than $48 million from Celsius. Mashinsky pleaded guilty to securities and commodities fraud.
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.
