The United States Department of Justice (DOJ) has submitted a memorandum proposing that Alex Mashinsky, the founder and former CEO of defunct crypto lending platform Celsius, serve 20 years behind bars for his involvement in the company’s crime, which led investors to lose $4.7 billion in crypto assets. According to the agency, this seems to be a fitting punishment for Mashinsky’s “years-long campaign of lies and self-dealing” on the Celsius platform.
How it Happened
Mashinsky and his team managed the Celsius network for years, building it into a reliable crypto deposit, borrowing, and lending platform. Over time, it attracted more users and customers who entrusted the project with huge funds. Around 2021, the firm managed about $20 billion in users’ crypto assets.
A year later, Celsius paused user fund withdrawals, and on July 13, 2022, it filed for Chapter 11 bankruptcy, acknowledging that it could no longer repay deposited customer funds. The DOJ pointed out that this situation proved Mashinsky, who had always assured users of funds safety, a liar.
According to the U.S. DOJ, the bankruptcy filing was expected as Mashinsky and his team fabricated lies and never had a secure fund backing system. Instead, he used deposited funds to experiment with uncollateralized loans and undisclosed market bets. Additionally, he allegedly used deposited funds to manipulate the price of the Celsius native token, CEL, enticing investors while he sold his holdings to enrich himself.
Legal Action
In December 2024, Mashinsky pleaded guilty to one count of committing commodities fraud and one count of committing securities fraud on his platform. He also revealed that he benefited about $48 million from his sales of the CEL token and has agreed to forfeit the proceeds.
Still, almost three years after the incident, an April 28, 2025, statement from the U.S. DOJ noted,
“The Court should sentence Alexander Mashinsky to twenty years’ imprisonment as just punishment for his years-long campaign of lies and self-dealing that left in its wake billions in losses and thousands of victimized customers.”
The agency reiterated that Mashinsky’s plea proved that the whole Celsius operation was not a mistake or result of negligence. Instead, it was a result of well-thought-out and planned lies.
