CEL Surges 80% Amid US DOJ Pursuing 20-Year Prison Term for Celsius Founder Mashinsky

Summary

• The token experienced a significant surge in price after the Department of Justice sought a lengthy prison term for former Celsius CEO Alex Mashinsky, alleging years of deceit and financial wrongdoing.
• A court appearance is set for May 8.

CEL’s Reaction to Legal Developments

The native cryptocurrency of Celsius Network, CEL, has faced a substantial decline recently, dropping to under $0.06 in early April before rebounding to approximately $0.08. However, in the last 24 hours, the token surged by 80%, reaching a 12-week peak of nearly $0.18. It has since decreased but is currently valued around $0.14, illustrating a 70% rise within the day.

Despite the recent gains, it remains significantly below its peak of over $8 from June 2021. At that time, its market capitalization was nearly $3.5 billion, while it currently accounts for just $5.1 million.

The token’s recent surge is linked to the Department of Justice’s (DOJ) call for a 20-year prison sentence for Alex Mashinsky, the former CEO of Celsius. This agency characterized the proposed sentence as appropriate punishment for a prolonged series of falsehoods and personal gain that resulted in substantial financial losses for many customers.

The DOJ further contended that Mashinsky provided false information regarding the management of customer deposits at Celsius, created a facade of profitability, and engaged in high-risk activities with client funds under misleading pretenses.

Additionally, he is accused of artificially inflating the market value of CEL, profiting from selling his personal token reserves at inflated prices.

Mashinsky’s wrongdoings allegedly enriched him while adversely affecting Celsius customers. The collapse of the company eliminated the savings of numerous retail investors who had placed their trust in his assertions, the legal document states.

The sentencing for the former Celsius CEO is scheduled for May 8. He has already accepted guilt on two fraud charges: commodities fraud and securities fraud. In his admissions, he acknowledged that he misrepresented Celsius’s “Earn” program, enticing investors to deposit Bitcoin on the platform, which resulted in personal gains of around $48 million.

The Journey of Celsius Network

Celsius Network once stood out as a major player in the cryptocurrency lending sector. However, in the summer of 2022, the platform suspended all customer withdrawals, exchanges, and transfers, citing severe market conditions and revealing significant liquidity challenges. Shortly thereafter, the company entered Chapter 11 bankruptcy, uncovering a $1.2 billion deficit and owing $4.7 billion to its clients.

Investigations that followed indicated that Mashinsky had allegedly misused customer funds and manipulated the value of CEL. He was arrested in July 2023 on multiple fraud charges and subsequently released on a $40 million bond, secured by his Manhattan property.

By November 2023, the New York Southern Bankruptcy Court approved a reorganization strategy, allowing Celsius to move forward from bankruptcy. A key aspect of this plan was the formation of a new Bitcoin mining entity named Ionic Digital, designed to benefit Celsius creditors.

At the start of last year, the company initiated the distribution of over $3 billion in both cryptocurrency and fiat to impacted users as part of its recovery plan. By late August 2024, Celsius had distributed approximately 93% of the sanctioned amount to more than 250,000 creditors worldwide. Shortly thereafter, the company announced intentions to provide an additional $127 million to its creditors.