Alex Mashinsky, former The CEO of bankrupt crypto lending company C, was pleaded guilty up to two counts of fraud, both carrying a maximum sentence of 30 years in prison.
After the company’s collapse, the U.S. Department of Justice charged Mashinsky on seven counts of fraud, conspiracy and market manipulation. Initially pleading not guilty, he will face a criminal trial in the Southern District of New York in January.
However, at Tuesday’s trial, Mashinsky pleaded guilty to one count of commodities fraud and one count of securities fraud. Mashinsky admitted to lying to C’s customers about basic aspects of the business, including how their funds were used, the DOJ said, as well as manipulating the price of a proprietary cryptocurrency token. rights for your personal financial benefit.
As part of the plea agreement, Mashinksky agreed to forfeit $48 million in ill-gotten gains. He will be sentenced on April 8, 2025.
“Alexander Mashinsky orchestrated one of the largest frauds in the cryptocurrency industry,” U.S. Attorney Damian Williams said in a statement. “Today’s sentences reflect this Office’s commitment to holding fraudsters like Mashinsky accountable for their crimes.”
Founded by Mashinsky in 2017, Celcius markets itself as a new-age alternative to traditional banks—the “safest place for your crypto,” the DOJ claims.
The company received cryptocurrency deposits, which were invested or lent out to pay interest to customers. People were attracted by promises of deposit interest rates of up to 17% – dozens of times higher than the interest rates offered by banks at the time. The DOJ claims that at its peak, C held $25 billion in client assets.
However, in May 2022, things went south. the the collapse of stablecoin Terra Luna blow one at the same time billion dollar loss on C’s balance sheet and as cryptocurrency prices plummeted, panicked customers rushed to withdraw billions of dollars worth of cryptocurrency from their C accounts. After investing in Terra Luna and other assets become sourThe company ran out of funds to make payments and was eventually forced to suspend withdrawals. In July of that year, Celsius file for bankruptcytrapped $4.7 billion of customer money.
