Celsius Founder Alex Mashinsky To Plead Guilty To Fraud Charges

Former Celsius CEO Alex Mashinsky has agreed to plead guilty to fraud charges in a case brought by US prosecutors.

The announcement came during a 3 December 2024 hearing at the US District Court for the Southern District of New York, where Mashinsky admitted to his role in commodities fraud and a scheme to manipulate the price of Celsius’ native token, CEL.

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Mashinsky Admits To Making False Claims About Earn Program

Mashinsky acknowledged making false claims about Celsius’ Earn Program, which persuaded investors to trade their Bitcoin, earning him approximately $42 million in profits.

“I said that Celsius had approval from regulators,” Mashinsky admitted, as reported by Inner City Press. “It was false. I falsely said I was not selling my CEL tokens. I accept full responsibility for my actions.”

As part of a plea agreement, Mashinsky will face sentencing on two charges, reduced from the original seven filed by prosecutors in July 2023.

Judge John Koeltl noted that Mashinsky could receive up to 30 years in prison if sentenced to the maximum term on both counts, to be served consecutively. The sentencing is scheduled for 8 April 2024.

Judge: Tell me what you did.
Mashinsky: I said that Celsius had approval from regulators. It was false. I falsely said I was not selling my CEL tokens. I accept full responsibility for my actions.
Judge: Were you working in Manhattan?
Mashinsky: Yes, your Honor

— Inner City Press (@innercitypress) December 3, 2024

Initially, Mashinsky pleaded not guilty to all charges and remained free on a $40 million bond with travel restrictions. The plea deal follows a setback for his legal team, which failed in November to have the two charges dismissed.

Judge Koeltl rejected their arguments, paving the way for a criminal trial that was previously set for January 2025.

Mashinsky stepped down as Celsius’ CEO in September 2022, but his case is part of a broader reckoning in the crypto sector.

Other prominent figures, such as FTX founder Sam Bankman-Fried and Binance’s Changpeng Zhao, have faced criminal charges. Bankman-Fried received a 25-year prison sentence, while Zhao pleaded guilty and served four months.

Additionally, Celsius’ former chief revenue officer, Roni Cohen-Pavon, pleaded guilty to four felony charges related to manipulating CEL’s price. He is set to be sentenced on Dec. 11, further underscoring the mounting legal pressures surrounding the defunct crypto lending platform.

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Celsius Lawsuit Against Tether

In August, Celsius sued Tether (USDT), the largest stablecoin issuer in the world, for allegedly misappropriating assets. The firm sought the return of approximately $2.4 billion worth of Bitcoin.

The lawsuit alleges that while Celsius was undergoing financial stress, Tether loaned them USDT. In exchange, Celsius sent Tether 39,542.42 BTC as collateral.

As the cryptocurrency market and Bitcoin value dramatically fell in 2022, as per the loan agreement, Celsius was required to provide more collateral to Tether to avoid liquidation.

According to the lawsuit, Celsius satisfied Tether’s requests for additional collateral on June 12th, providing 3,000 additional Bitcoins worth about $350 million at the time.

Tether later requested a second collateral requirement and Celsius claims that as it was putting together the funds during a contractually mandated ten-hour waiting period, Tether liquidated the loan, removing the opportunity for Celsius to provide additional collateral.

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