The founder and former CEO of the cryptocurrency lending platform Celsius Network was sentenced Thursday to 12 years in prison after a prosecutor labeled him a predator who “preyed on hope” by enticing vulnerable customers to risk their life savings for a supposedly safe investment.
Alexander Mashinsky, 59, was sentenced by U.S. District Judge John G. Koeltl, who said a substantial term in prison was necessary for someone who engaged in “extremely serious” crimes that enabled him to pocket over $45 million while some of his customers lost everything and suffered severe psychological harm.
Celsius declared bankruptcy in 2022, exposing risky financial bets Mashinsky had made with some of the $20 billion that thousands of customers poured into the company. He had promised that their money would be safe and secure at Celsius, which pitched itself as a modern-day bank where crypto assets could earn interest.
The defense blamed the collapse of Celsius on a “cataclysmic downturn” of cryptocurrency markets in May and June of 2022 and said in court papers that Mashinsky’s “actions were never predatory, exploitative or venal. He never acted with the intent to hurt anyone.”
But Assistant U.S. Attorney Allison Nichols cast him as a financial predator, telling the judge Thursday that Mashinsky had deceived customers from the start by exaggerating Celsius’ ability to build momentum.
“He preyed on hope,” she said. “Mashinsky knew exactly what he was doing — selling these people hope.”
She said the customers were not going to be made financially whole regardless of money that can be recovered through bankruptcy proceedings.
Before he was sentenced, Mashinsky sobbed several times as he apologized to customers and referenced his difficult past as his family was able to leave a small Ukrainian town in the former Soviet Union with help from the United States when he was 7.
The family moved to Israel, where Mashinsky served three years in the Israeli Defense Forces as a fighter pilot before coming to America.
Mashinsky said he “never meant to hurt anybody here after all this country has done for me.”
“I’m truly sorry,” he said, describing himself as someone “who came from nothing.”
When he pleaded guilty in December, Mashinsky admitted to misleading customers between 2018 and 2022 by promising their investments were safe even as he fabricated Celsius’ profitability and put customers’ funds at the mercy of uncollateralized loans and undisclosed risky market bets.
His attorney, Marc Mukasey, said victim impact statements submitted to the court were “rather brutal” toward his client.
“We hear the intensity of their pain,” he said. “Our sympathies are with everyone.”
Several victims spoke at the sentencing hearing.
Cameron Crewes, who serves on a victims’ committee, called for a “harsh sentence,” saying nearly 250 victims died before they could see justice served or get adequately compensated for losses.
“Many people have been wiped out,” he said.
In a statement, U.S. Attorney Jay Clayton said Mashinsky “made tens of millions of dollars while his customers lost billions.”
He added: “America’s investors deserve better. The case for tokenization and the use of digital assets is strong, but it is not a license to deceive. The rules against fraud still apply.”
