- Alex Mashinsky, former CEO of Celsius, has pled guilty to commodities fraud and securities fraud.
- Mashinsky admitted to market manipulation and making false claims about Celsius’s native token, CEL.
- Celsius’s collapse was due to poor market conditions and internal mismanagement, leading to a $1.2 billion shortfall.
Alex Mashinsky, former CEO of the bankrupt crypto lending platform, Celsius, has pled guilty to fraud charges, during a US District Court of the Southern District of New York.
During the hearing, Mashinsky confessed his involvement in fraud and market manipulation before prosecutors. The former CEO admitted to falsely claiming that Celsius native token—CEL—was approved by regulators, in an attempt to convince people to join Celsius’ lending program.
Furthermore, Mashinsky also acknowledged that he made false claims to CEL investors, promising not to sell the CEL tokens, which turned out to be a lie. The confession comes as part of an agreement to drop Mashinsky’s sentence from six charges to just two: commodities fraud and securities fraud.
Initially, Alex had pled ‘not guilty’ and had agreed to a no-travel $40 million bond. However, after failing to get the charges dismissed his legal team changed the narrative and pled guilty to these two charges.
Mashinsky is now facing a hefty sentence of up to 30 years in prison for his crimes. Former chief revenue officer of the company, Roni Cohen-Pavon, also pleaded guilty to four charges regarding price manipulation of CEL.
Celsius Network was a crypto-lending platform founded. It got its start in 2017, founded by Daniel Leon, Nuke Goldstein, and Alex Mashinsky. For a time, the firm was a thriving DeFi company, managing about $12 billion in assets.
Everything went crashing down in 2022, when the poor crypto market conditions made the overall cryptocurrency market undervalued, causing the firm to file for Chapter 11 bankruptcy. It was later revealed that internal mismanagement was also to blame for Celsius’ downfall.
Reports reveal that the company used customer deposits to fund its Bitcoin mining, and also betting on futures investments. At one point, Celsius had to completely freeze withdrawals due to a lack of liquidity, leading to a monumental shortfall and eventually, the company’s bankruptcy.
