Prosecutors Demand 20-Year Sentence for Failed Crypto Platform Founder

NEW YORK (AP) — The person who started and previously led the now-defunct cryptocurrency loan company Celsius Network must serve 20 years in prison for deceit and self-serving actions that resulted in billions of dollars in losses for clients, prosecutors informed the judge on Tuesday.

Alexander Mashinsky The individual, aged 59, assured numerous clients that their funds were secure and stable, which resulted in investors depositing more than $20 billion into Celsius by 2021, as stated in documents submitted prior to a planned sentencing hearing on May 8 at the Manhattan federal courthouse.

Prosecutors stated, “That was untrue,” pointing out that Celsius filed for bankruptcy in 2022 and admitted it couldn’t repay investors with their original investments.

According to prosecutors, Mashinsky misrepresented Celsius’ financial health by fabricating its profits and exposed customer funds to risks associated with unsupported loans and hidden speculative investments. While doing so, the company portrayed itself as a contemporary banking alternative where individuals could securely deposit cryptocurrency and receive interest payments.

"Mashinsky's behavior enriched him," they noted.

As stated in their filing with the judge, the defense attorneys argued that their client should receive no more than one year and one day in jail following his admission of guilt in December to federal fraud allegations. This plea involved admitting to deceiving clients from 2018 through 2022.

The defense attributed Celsius's downfall to a "devastating decline" in the cryptocurrency market during May and June of 2022.

"His behavior was always free from predation, exploitation, or corruption. He never intended to cause harm to others. He never took someone else's money or covertly seized another person's possessions. Furthermore, his motivations have never stemmed from greed, cruelty, or excessive desire," stated the attorneys.

They pointed out that Mashinsky experienced a challenging upbringing in a tiny Ukrainian town within the erstwhile Soviet Union. His family left when he was seven and relocated to Israel. There, Mashinsky spent three years serving in the Israeli Defense Forces as a combat aviator.

"The focus of this case isn’t on an arrogant, greed-driven con artist who believed they could evade accountability for plundering others’ well-deserved earnings just to indulge their selfish desires. It also doesn’t revolve around a fraudulent business entity that crumbled into nothingness upon declaring bankruptcy. Such narratives are merely retrospective, simplistic, and objectifying clichés that aren’t relevant in this scenario," stated the defense.

The attorneys portrayed Mashinsky as a dedicated father to six children, arguing for leniency partly due to his offenses stemming from "lawful endeavors that inadvertently transgressed legal boundaries owing to unforeseen challenges."

At his plea, Mashinsky admitted illegally manipulating the price of Celsius’ proprietary crypto token while secretly selling his own tokens at inflated prices to pocket about $48 million.

In court, he confessed that in 2021 he had publicly indicated there was regulatory approval for the company’s actions since he understood that this would make customers "feel falsely reassured."

In 2019, he admitted to selling crypto tokens despite publicly stating otherwise, aware that this deception might provide misleading assurance to his clients.

The indictment claimed that Mashinsky promoted Celsius via media appearances, his social media platforms, and the company’s official site. Additionally, he hosted a recurring "Ask Mashinsky Anything" session which was uploaded to both the Celsius website and a dedicated YouTube channel.

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