Alex Mashinsky to Plead Guilty to Two Charges in Deal with US Prosecutors

Alex Mashinsky, the former CEO of Celsius, has agreed to plead guilty to two felony charges related to his role in defrauding investors and manipulating the price of the platform's native CEL token. The plea agreement follows a legal battle where Mashinsky’s lawyers failed to have charges dismissed, and it comes after a lengthy investigation into the operations of Celsius.

Charges and Guilty Plea

In a court hearing on December 3, 2023, at the United States District Court for the Southern District of New York, Mashinsky admitted to commodities fraud and orchestrating a fraudulent scheme to manipulate the CEL token’s price. These charges are tied to misleading claims about Celsius's Earn Program, which encouraged users to invest their Bitcoin in exchange for promised returns. According to prosecutors, Mashinsky’s false statements about regulatory approvals and his denial of selling CEL tokens misled investors, helping him pocket an estimated $42 million in profits.

said that Celsius had approval from regulators,” Mashinsky acknowledged in court, according to reports from Inner City Press. “It was false. I falsely said I was not selling my CEL tokens. I accept full responsibility for my actions.

Plea Deal Details

As part of the plea agreement, Mashinsky will plead guilty to just two of the seven charges initially filed against him in July 2023. Judge John Koeltl informed Mashinsky that the maximum sentence for the two charges could amount to up to 30 years in prison if served consecutively. However, the exact length of his sentence will be determined at a future hearing scheduled for April 8, 2024.

Mashinsky, who resigned as CEO of Celsius in September 2022, had initially pleaded not guilty to all charges and had been out on a $40 million bond with travel restrictions. A trial was expected to begin in January 2025, but this plea deal has now brought that process to a close.

Legal Setbacks and Fallout

The plea deal comes shortly after Mashinsky’s legal team lost a motion in November 2023 to have the charges dismissed. Judge Koeltl ruled that the defense's arguments were either moot or without merit, allowing the criminal trial to proceed. With the deal in place, the case against Mashinsky will move forward to sentencing, but the former CEO will avoid the full trial process.

Mashinsky’s legal troubles place him among a growing list of high-profile crypto executives facing legal consequences. He is the latest crypto figure to be charged, following the convictions of former FTX CEO Sam Bankman-Fried and the charges against Binance’s CEO Changpeng Zhao. Bankman-Fried, who was convicted of fraud and money laundering, is currently serving a 25-year prison sentence, while Zhao has pleaded guilty and served a brief prison term.

The Bigger Picture

Mashinsky’s legal woes also shine a spotlight on the broader collapse of Celsius, a company that at one point was one of the largest crypto lenders in the industry. Celsius filed for bankruptcy in July 2022, revealing significant financial mismanagement and leading to the loss of billions of dollars of user funds. This plea agreement and potential prison time for Mashinsky also highlight the growing scrutiny faced by executives in the crypto space.

Roni Cohen-Pavon, the former chief revenue officer of Celsius, who was also involved in the manipulation of the CEL token’s price, pleaded guilty to four felony charges in September 2023. Cohen-Pavon is scheduled to be sentenced on December 11, 2023.

Mashinsky’s case remains one of the most significant in the crypto sector, and his upcoming sentencing could set a major precedent for how regulators and courts handle fraud cases within the rapidly evolving industry.