JAKARTA Alex Mashinsky, founder and former CEO of Celsius Network, was sentenced to 12 years in prison by federal justices in Manhattan on Thursday (8/5) after pleading guilty on charges of securities and commodity fraud. This verdict is one of the toughest sentences imposed on the collapse of the crypto market in 2022.
Mashinsky, 59, who was once a central figure in the crypto loan industry boom, is now a symbol of a major failure. Prosecutors stated that he deliberately misled customers about Celsius's security and artificially increased the value of his company's crypto token, CEL, to attract investors.
Federal prosecutors had asked for a minimum sentence of 20 years in prison, calling Mashinsky's actions a "crime that cost thousands of people and caused billions of dollars in losses", while he himself enjoyed personal gains of more than $48 million. However, judge John Koeltl ruled a 12-year sentence, followed by three years of parole and the confiscation of Mashinsky's personal funds of $48.4 million.
Mashinsky previously requested a light sentence in the form of one year and one day in prison, citing personal regret and intention to correct mistakes against his family and Celsius customers. However, the judge rejected the request.
"This case shows that although digital technology such as tokenization and crypto assets has strong potential, it is not a license to cheat," US Attorney General Jay Clayton said in a statement.
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Founded in 2017 in Hoboken, New Jersey, Celsius had promised customers high interest rates of up to 17% to their crypto assets. However, when crypto prices fell in mid-2022, the company faced a massive withdrawal of funds and eventually filed for the protection of the 11th Chapter bankruptcy in July 2022 with a balance deficit worth $1.19 billion.
Mashinsky, who was born in Ukraine and had lived in Israel before moving to New York in 1988, is now also facing a number of civil charges from the US Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Federal Trade Commission (FTC), and New York State Attorney General Letitia James.
Mashinsky's case reminded the verdict against FTX founder Sam Bankman-Fried, who is currently serving 25 years in prison for a similar fraud. He is also appealing the verdict.
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