Founder of failed crypto lending platform Celsius Network pleads guilty to fraud charges

recent YORK — The founder and former CEO of the failed cryptocurrency lending platform Celsius Network could face decades in prison after pleading guilty Tuesday to federal fraud charges, admitting that he misled customers about the business.

Alexander Mashinsky, 58, of Manhattan, entered the plea in recent York federal court to raw materials and financial instruments fraud.

He admitted illegally manipulating the worth of Celsius’s proprietary crypto token while secretly selling his own tokens at inflated prices to pocket about $48 million before Celsius collapsed into financial setback in 2022.

In court, he admitted that in 2021 he publicly suggested there was regulatory consent for the corporation’s moves because he knew that customers “would discover untrue comfort” with that.

And he said that in 2019, he was selling the crypto tokens even though he told the community that he was not. He said he knew customers would draw untrue comfort from that too.

“I receive packed responsibility for my actions,” Mashinsky said of crimes that stretched from 2018 to 2022 as the corporation pitched itself to customers as a modern-day lender where they could safely financing crypto assets and earn profit.

U.S. Attorney Damian Williams said in a release that Mashinsky “orchestrated one of the biggest frauds in the crypto industry” as his corporation’s assets purportedly grew to about $25 billion at its peak, making it one of the largest crypto platforms in the globe.

He said Mashinsky used catchy slogans like “Unbank Yourself” to entice prospective customers with a pledge that their money would be as secure in crypto accounts as money would be in a lender. Meanwhile, prosecutors said, Mashinsky and co-conspirators used customer deposits to pool economy purchases of the Celsius token to prop up its worth.

Machinsky made tens of millions of dollars selling his own CEL tokens at artificially high prices, leaving his customers “holding the bag when the corporation went bankrupt,” Williams said.

An indictment alleged that Mashinsky promoted Celsius through media interviews, his social media accounts and Celsius’ website, along with a weekly “inquire Mashinsky Anything” session broadcast that was posted to Celsius’ website and a YouTube channel.

Celsius employees from multiple departments who noticed untrue and misleading statements in the sessions warned Mashinsky, but they were ignored, the indictment said.

A plea agreement Mashinsky made with prosecutors calls for him to be sentenced to up to 30 years in prison and to forfeit over $48 million, which is the amount of money he allegedly made by selling his corporation’s token.

Sentencing was scheduled for April 8.