- Alex Mashinsky, founder and ex-CEO of Celsius, pleaded guilty to two counts of fraud.
- His legal team also agreed not to appeal any jail time over 30 years, although it’s unlikely Mashinsky will be behind bars for the full duration.
- Mashinsky admitted to misleading investors regarding Celsius’ regulatory status.
- The entire time he was also selling off CEL tokens at an artificially inflated price, making off with US $42m.
Nearly three years on, the dust from crypto’s horror run in 2022 is starting to settle.
Most will remember November 2022 – when FTX collapsed – as the main catastrophe that kick-started a long and arduous crypto winter. But in reality, the dominoes were already in place earlier that year, when TerraUSD depegged from the dollar and lending firm Celsius imploded.
After a lengthy legal process, the Celsius founder and former CEO Alex Mashinsky pleaded guilty to two charges of fraud (out of the seven put before him).
Agreeing to 30 years jail time, the crypto world can finally start to heal as the industry’s most exploitative moguls continue to face the music.
Related: Swipe Right for Scam: Overseas Call Centre Busted for Crypto Cons on Aussie Hearts
Celsius Collapse Cost Customer’s Billions
Celsius Network was one of the blockchain scene’s biggest and earliest lenders, offering attractive yields on digital asset deposits. The mechanism was fairly similar to a high-interest saving account, unlike DeFi lenders which typically utilise proof-of-stake and liquidity pools to earn passive income.
This meant that Celsius was ultimately an unregulated, centralised bank – something that CEO and founder Alex Mashinsky preyed upon.
As global interest rates and inflation started to rise following the COVID-19 pandemic, operations for many tech businesses got a little dicey.
By July 2022, Celsius’ position was untenable and the company filed for Chapter 11 bankruptcy as customers went on a bank run.
When all was said and done, Celsius owed investors approximately US $4.7b (AU $7.27b).
Mashinsky Deliberately Misled Investors, Manipulated Market for CEL Tokens
However, before the proverbial hit the fan, Mashinsky and Celsius’ Chief Revenue Officer took advantage of their positions of power. Specifically, both parties held significant amounts of Celsius’ native token, CEL.
Earlier this week, Mashinsky admitted lying to investors regarding Celsius’ regulatory status, ensuring customers that they’d been approved for their “earn” program.
In reality, no such approval had taken place.
(You know things are bad when we agree with Peter Schiff…)
Even worse, Mashinsky steadily sold off his large portfolio of CEL without informing investors – information that would have a major impact on the token’s popularity.
All up, the courts believe the former CEO made off with approximately US $42m (AU $65m) worth of profits.
In the court hearing, Mashinsky owned up to his actions.
I know what I did was wrong, and I want to try to do whatever I can to make it right.
Former CEO and Founder of Celsius, Alex Mashinsky
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