The U.S. Department of Justice is pushing for a severe punishment for Alex Mashinsky, the mastermind behind Celsius Network, seeking a 20-year prison term. Prosecutors accuse him of orchestrating a fraudulent scheme that resulted in approximately $7 billion in losses for customers.

In their recent filing, federal prosecutors described Mashinsky as the brains behind a prolonged series of deceitful actions and self-serving behavior that ultimately cost customers billions. The sentencing hearing is scheduled for May 8, with authorities stressing the importance of imposing a substantial sentence to discourage similar illicit practices within the cryptocurrency sector.

As the founder and ex-CEO of Celsius Network, Alex Mashinsky faces a potential two-decade stint in prison if the DOJ's sentencing request is granted by Judge John G. Koeltl on May 8. The prosecution's memo highlights Mashinsky's guilty plea to intentionally misleading clients about their deposit safety and manipulating the CEL token for personal profit.

Prosecutors criticized Mashinsky for failing to take responsibility for his actions and attempting to shift blame onto various factors such as regulatory bodies, market conditions, and even his victims. They characterized his offenses as deliberate decisions aimed at deceiving and defrauding others to amass wealth.

DOJ Seeks 20-Year Sentence for Celsius Founder Alex Mashinsky

Federal prosecutors called Mashinsky the architect of a "years-long campaign of lies and self-dealing" that left customers with billions in losses.

• Alex Mashinsky, the former CEO of Celsius Network, faces a potential 20-year prison sentence for orchestrating a fraud that resulted in nearly $7 billion in customer losses.
• Mashinsky pleaded guilty to deliberately misleading customers about the safety of their deposits while manipulating the CEL token for personal gain.
• The sentencing is set for May 8, with prosecutors emphasizing the need for a significant sentence to deter similar misconduct in the crypto industry.

During its prime in 2021, Celsius Network oversaw more than $20 billion in crypto assets from customers. Despite promoting itself as a secure banking alternative with lucrative returns and minimal risk, prosecutors revealed that Celsius engaged in risky trading practices using customer funds without collateral, artificially inflating its token's value while assuring clients of their funds' security.

Following its bankruptcy filing, Celsius Network left customers facing losses exceeding $1 billion initially but now estimated at close to $7 billion considering post-2024 crypto prices after the "Trump-trade" rally. Prosecutors warned against leniency in sentencing, emphasizing that only a significant prison term would serve justice by deterring other crypto executives from pursuing personal gains at the expense of their clientele.

Mashinsky, who pleaded guilty in December to misrepresenting the safety of customer deposits and manipulating Celsius's CEL token, “refuses to accept responsibility” for his crimes and continues to shift blame to regulators, market conditions and even his victims, prosecutors said.

“Mashinsky’s crimes were not the product of negligence, naivete, or bad luck,” they wrote. “They were the result of deliberate, calculated decisions to lie, deceive, and steal in pursuit of personal fortune.”

At its peak in 2021, Celsius managed more than $20 billion in customer crypto assets. Mashinsky aggressively marketed the platform as a safe alternative to banks, promising high yields and low risk.

Prosecutors said those promises were a sham: Celsius took uncollateralized loans, made risky trades and secretly used customer assets to manipulate the price of its CEL token — all while publicly assuring customers their funds were safe.

Post-bankruptcy, customers were left with a shortfall exceeding $1 billion. Adjusting for today's crypto prices post-2024's "Trump-trade" rally, prosecutors estimate the total loss is closer to $7 billion.

Prosecutors warned that anything less than a significant prison sentence would fail to reflect the gravity of Mashinsky’s conduct, undermine respect for the law, and send the wrong message to other crypto executives tempted to chase personal enrichment at the expense of their customers.

Judge John G. Koeltl will sentence Mashinsky on May 8.