Celsius Ex-CEO Alex Mashinsky Sentenced to 12 Years for Fraud

On May 8, 2025, the U.S. District Court for the Southern District of New York sentenced Alex Mashinsky, former CEO of Celsius Network, to 12 years in prison for orchestrating a multi-billion-dollar fraud, as reported by Inner City Press.

The sentencing, presided over by Judge John G. Koeltl, follows Mashinsky’s guilty plea to securities and commodities fraud in December 2024. Despite prosecutors’ push for a 20-year term, the 12-year sentence underscores the severity of his crimes while highlighting that President Donald Trump’s recent pardons of crypto executives do not extend to all offenses, signaling boundaries to his crypto-friendly stance.

Sentencing Process and Prosecutors’ Push for 20 Years

Mashinsky’s sentencing took place in courtroom 14A at 500 Pearl Street, Manhattan, where he faced Judge Koeltl after pleading guilty to two counts in December: securities fraud for misleading investors about Celsius’s financial health and commodities fraud for manipulating the price of Celsius’s proprietary token, CEL. Prosecutors, led by U.S. Attorney Jay Clayton, sought a 20-year sentence, describing Mashinsky as “unrepentant” and his fraud as “extremely serious.” They argued that Mashinsky defrauded hundreds of thousands of retail investors by falsely promoting Celsius as a safe alternative to banks, while secretly engaging in risky investments and market manipulation that led to a $4.7 billion loss when Celsius collapsed in 2022. Prosecutors previously stated in a letter to the judge, arguing that “His crimes were not the product of negligence, naivete, or bad luck. They were the result of deliberate, calculated decisions to lie, deceive, and steal in pursuit of personal fortune.”

The prosecution highlighted Mashinsky’s deceptive tactics, including false claims during weekly livestreams that Celsius’s “Earn” program was regulator-approved and that the company avoided uncollateralized loans. In reality, Celsius made high-risk, uncollateralized loans, resulting in a $1.2 billion balance sheet deficit by July 2022. Mashinsky also profited $48 million by selling CEL tokens at artificially inflated prices, orchestrated through market purchases funded by customer deposits. Victim testimonies, including creditor Cameron Crewes, who noted that 231 Celsius creditors had died since the collapse, underscored the human toll, justifying the call for a harsh penalty.

Mashinsky’s defense, led by attorneys Marc Mukasey and Torrey Young, requested a lenient one-year-and-one-day sentence, citing his background as a refugee, Israeli combat veteran, and philanthropist who hired homeless individuals. They argued that Mashinsky was not the sole architect of the fraud, claiming Celsius’s collapse was partly due to market conditions beyond control like the Terra/LUNA crash. However, Judge Koeltl rejected these arguments, noting Mashinsky’s failure to rebut evidence of fraud, including lies about Celsius’s initial coin offering and risk management practices. The 12-year sentence, comprising concurrent 120-month and 144-month terms, was paired with a $50,000 fine and $48.39 million forfeiture.

Crimes Committed: Fraud and Market Manipulation

Mashinsky’s convictions stem from two fraudulent schemes at Celsius, a crypto lending platform he founded in 2017 that once managed $25 billion in assets. In the first scheme, he misled investors about Celsius’s profitability, safety, and investment practices. Marketing Celsius as the “safest place for your crypto” with slogans like “Unbank Yourself,” Mashinsky promised high yields through the “Earn” program while concealing risky bets, including $935 million in speculative Terra/LUNA investments and loans to the now-defunct Three Arrows Capital. These actions led to a $1.19 billion deficit when Celsius froze withdrawals in June 2022, trapping $4.7 billion in customer funds.

In the second scheme, Mashinsky and former Chief Revenue Officer Roni Cohen-Pavon, who pleaded guilty in September 2023, manipulated CEL’s price by spending hundreds of millions in customer funds to buy the token on open markets, artificially inflating its value. Mashinsky sold his CEL holdings at these inflated prices, netting $48 million, while falsely claiming he was not selling. These actions violated securities and commodities laws, leading to Celsius’s bankruptcy in July 2022 and significant investor losses.

Trump’s Pardons and the Boundaries of Crypto Leniency

Mashinsky’s sentencing follows President Trump’s clemency actions for crypto executives, reflecting his administration’s pro-crypto stance but also its commitment to upholding justice for severe fraud. Upon taking office, President Donald Trump pardoned Ross Ulbricht, the founder of Silk Road, and granted clemency to Arthur Hayes, Benjamin Delo, and Samuel Reed, three BitMEX cryptocurrency exchange executives who admitted to violating the Bank Secrecy Act by failing to implement adequate anti-money laundering programs.

These actions sparked hope among other convicted crypto figures, including former FTX CEO Sam Bankman-Fried, who claimed in an interview that his trial was politicized. Reports indicate his parents met with attorneys and individuals close to the Trump administration to explore the possibility of a presidential pardon. Recently, Binance’s founder Changpeng Zhao also applied for a pardon for his money laundering conviction.

As a result, some speculated that Alex Mashinsky might receive lenient criminal treatment. However, this did not occur. Unlike these cases, which involved AML violations or cooperation with authorities, Mashinsky’s sentence reflects the administration’s boundary for clemency: fraud causing significant retail investor harm remains prosecutable. Although Mashinsky’s parents reportedly sought a pardon through Trump’s associates, no clemency was granted, and his 12-year term signals that egregious deception and market manipulation face accountability.

Ultimately, no industry title should ever serve as a shield for behaviors that deliberately turn others’ lives into tragedies.