Alexander Mashinsky, founder and former CEO of the failed cryptocurrency platform Celsius Network, pleaded guilty Tuesday to federal fraud charges and admitted that he misled customers.
Mashinsky could face decades in prison, according to The Associated Press. He acknowledged illegally manipulating the price of Celsius’ proprietary token while secretly selling his own tokens at inflated prices. He made $48 million off the scheme before Celsius filed for bankruptcy in 2022.
By that time, Celsius had become one of the largest crypto platforms in the world, with assets of around $25 billion. Customers thought of the business as a modern bank where they could safely deposit crypto assets and earn interest.
Mashinsky admitted to making statements that gave consumers “false comfort” about the business, including suggesting that it had regulatory consent when it did not. He also said he was selling crypto tokens while telling the public that he wasn't.
"I accept full responsibility for my actions," Mashinsky told the court.
Prosecutors said Mashinsky used slogans like “Unbank Yourself” to persuade customers to invest and used their deposits to pay for market purchases of the Celsius token to prop up its value.
He pleaded guilty to two of the seven counts he was initially charged with: commodities fraud, and a fraudulent scheme to manipulate the price of CEL, Celsius’ in-house token, CNBC reported. His trial had been scheduled for Jan. 28.
"Mashinsky made tens of millions of dollars selling his own CEL at artificially high prices, while his customers were left holding the bag when the company went bankrupt,” Damian Williams, the U.S. Attorney in Manhattan, said in a statement.
Mashinsky's plea agreement calls for him to be sentenced to up to 30 years in prison and to forfeit the money he allegedly made by selling Celsius' token. He is scheduled to be sentenced on April 8.
Other crypto bosses charged with fraud after the industry collapsed in 2022 include FTX founder Sam Bankman-Fried, convicted of stealing around $8 billion from customers. In March, he was sentenced to 25 years in prison.
Crypto is looking to make a comeback since prices slumped in 2022. Prices for bitcoin have surged since Donald Trump won the presidential election in November, partly because he is expected to provide a friendlier regulatory environment for the industry.
