Prosecutors Push for 20-Year Sentence for Failed Crypto Platform Founder

NEW YORK (AP) — The individual who established and previously led the now-defunct digital currency loan company Celsius Network must serve two decades in prison for deceit and self-serving actions that led to billions of dollars in losses for clients, prosecutors informed a judge on Tuesday.

Alexander Mashinsky , aged 59, assured numerous clients that their funds were safe and secure, which prompted investments totaling more than $20 billion to be deposited into Celsius by 2021, according to documents submitted prior to his scheduled sentencing hearing on May 8 at a federal courthouse in Manhattan.

Prosecutors stated, "This was not the case," pointing out that Celsius filed for bankruptcy in 2022 and admitted it couldn’t repay investors with their initial investments returned.

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

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

When submitting to the judge themselves, the defense attorneys argued that their client should receive no more than one year and a single additional day behind bars following his admission of guilt in December to federal fraud accusations. Through this plea deal, he acknowledged 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 money illicitly or absconded with someone else’s possessions. Furthermore, he has never been motivated by greed, cruelty, or excessive desire for wealth," stated his legal representatives.

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 years old. They relocated to Israel, where Mashinsky spent three years serving in the Israeli Defense Forces as a combat aviator.

"This case isn’t about a conceited and selfish fraudster who believed they could evade accountability for robbing individuals of their well-deserved earnings just to indulge in personal luxuries. It also doesn’t involve a fraudulent business that crumbled like a deck of cards upon declaring bankruptcy. These after-the-fact, simplistic, and degrading stereotypes have no relevance in this situation," stated the defense.

The attorneys portrayed Mashinsky as a dedicated father to six kids, arguing for leniency partly due to his offenses stemming from "lawful pursuits that inadvertently turned illegal 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 customers would feel falsely reassured by this information.

In 2019, he admitted to sellingcrypto tokens despite publicly stating otherwise, aware that this deception might mislead his customers into feeling falsely secure.

According to an indictment, Mashinsky promoted Celsius via media appearances, his personal social platforms, and the company’s official site. Additionally, he conducted a recurring "Ask Mashinsky Anything" segment which was uploaded both onto the Celsius website and a dedicated YouTube channel.

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