The U.S. Department of Justice (DOJ) is seeking a 20-year prison sentence for Alex Mashinsky, the former CEO of bankrupt crypto lending platform Celsius, for orchestrating what it calls a “years-long campaign of lies and self-dealing” that defrauded thousands of investors.
In a sentencing memorandum filed on April 28, federal prosecutors urged the court to impose a two-decade sentence, citing Mashinsky’s central role in a scheme that left customers unable to access nearly $4.7 billion in cryptocurrency when Celsius froze withdrawals in June 2022.
The DOJ described the fraud as deliberate and calculated, not a result of misjudgment or market misfortune.
Mashinsky Admitted $550M Crypto Fraud, Pocketed $48M, DOJ Says
According to the court document, Mashinsky admitted in his December 2024 guilty plea that he spearheaded fraudulent activities that caused over $550 million in losses and netted him at least $48 million in personal gains.
Prosecutors emphasized that Mashinsky’s actions were not accidental but rather “intentional efforts to deceive and steal,” designed to boost his own fortune at the expense of retail investors.
At the height of its operation in 2021, Celsius claimed to manage over $20 billion in crypto assets, promoting itself as a safe and profitable alternative to traditional banking.
However, the DOJ revealed that behind the scenes, the company engaged in risky lending practices, made speculative trades, and used customer funds to manipulate the price of its CEL token.
Mashinsky, despite assuring users that he was holding onto his CEL tokens, had actually sold more than $48 million worth of them at inflated prices.
Celsius filed for bankruptcy in July 2022, leaving around $4.7 billion in user assets locked on the platform.
The DOJ argues that Mashinsky’s sentence should reflect the significant harm caused to investors and serve as a deterrent to similar misconduct in the crypto industry.
Celsius Victims Demand Harsh Sentence for Mashinsky
Last week, disgruntled investors from across the globe urged a federal judge to impose the maximum sentence on Mashinsky for his role in the company’s 2022 collapse.
Over 200 victim impact statements were submitted to the court, with the majority demanding a severe punishment, citing financial ruin, emotional distress, and shattered dreams.
One investor compared Mashinsky to Bernie Madoff and called for a life sentence, blaming him for pushing some victims to suicide.
While his legal team has requested a sentence of just over a year, probation officers have recommended 15 years.
The call for a harsh sentence comes amid a broader softening in crypto enforcement under the Trump administration, which has recently pardoned several high-profile crypto figures.
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