U.S. Justice Department Pursues 20-Year Prison Term for Celsius Founder Alex Mashinsky

Alex Mashinsky, who established and led Celsius Network before its downfall, is at risk of receiving a 20-year prison sentence if the U.S. Department of Justice’s recent request for sentencing is approved.

In a memo submitted on Monday, the DOJ recommended that the court deliver a 20-year prison term, characterizing the offenses as a “deliberate and calculated” fraud that resulted in nearly $7 billion in losses for customers and left numerous individuals in dire financial situations.

Mashinsky, who entered a guilty plea in December for deceit regarding the safety of customer deposits and manipulation of Celsius’s CEL token, reportedly continues to deny accountability for his actions, attributing the blame to regulators, market fluctuations, and even the victims themselves, according to prosecutors.

Prosecutors stated, “Mashinsky’s actions stemmed not from carelessness, naivety, or unforeseen circumstances but were instead the outcome of intentional, calculated choices made in pursuit of personal gain by lying, deceiving, and stealing.”

At its height in 2021, Celsius oversaw more than $20 billion in customer cryptocurrency holdings. Mashinsky promoted the service as a secure alternative to traditional banks, pledging high returns and minimal risks.

According to prosecutors, these assurances were misleading: Celsius engaged in uncollateralized lending, pursued high-risk trades, and covertly utilized customer funds to drive up the value of its CEL token, all while publicly claiming that client assets were safe.

Moreover, it was reported that Mashinsky profited over $48 million by selling CEL at artificially inflated prices, despite assuring customers he was holding onto his investments as they were. When Celsius declared bankruptcy in July 2022, around $4.7 billion of customer funds became inaccessible.

Following the bankruptcy, it was estimated that customers faced a shortfall exceeding $1 billion. Taking into account the adjusted cryptocurrency values after the 2024 “Trump-trade” surge, prosecutors believe the actual loss could be around $7 billion.

The DOJ cautioned that any sentence shorter than a substantial term would not adequately reflect the seriousness of Mashinsky’s actions, would diminish respect for the law, and might encourage other cryptocurrency leaders to prioritize personal gain over the welfare of their clients.

Judge John G. Koeltl is set to pass judgment on Mashinsky on May 8.