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Alex Mashinsky, founder of the collapsed Crypto Lender Celsius Network, was sentenced to 12 years in prison after sought a role in a scheme that fraudulent customers and used customer funds to manipulate tokens.
Machineski pleaded guilty in December to securities and product fraud. Federal prosecutors in New York said they would use deposits to raise the price of their own crypto tokens if they steered them on the promise of high returns on digital deposits and misleaded Celsius business.
At its peak, celsius held $25 billion in customer assets. However, the bank was unable to collect funds after volatility in the crypto market in 2022, halting hundreds of thousands of clients to withdraw.
District Judge John Coert of the Southern District of New York declared machine skiing, 59, on Thursday. Mashinsky previously agreed to confiscate more than $48 million. His bank account was frozen by US authorities after his indictment in 2023.
The ruling comes when US President Donald Trump courted the crypto industry, launching his own token, softening the administration’s approach to enforcement and surveillance of digital assets. In March, he forgives the company behind Crypto Exchange Bitmex. This pleaded guilty last year to violating the Bank’s Secret Act on Anti-Branch Control. Additionally, the new Department of Justice policy prohibits crypto companies from prosecuting users’ actions.
“The cases of tokenization and digital asset use are strong, but they are not licenses to deceive,” Jay Clayton, a US lawyer for the Southern District of New York, said in a statement. “The rules against fraud still apply and SDNY retain those who hold them accountable for their crimes.”
In his application last month, prosecutors sought a 20-year sentence, saying Machineski was a “magnificent proportional fraudster” and “a strict sentence is justified.”
Maski told the court in December that “what I did was wrong and I want to do what I can to get it right,” and that he accepted full responsibility for his actions.
In a court filing last week, Maski said the ruling should be within 366 days. He accused the government of “poisonous submission” to the court, saying he was “the first non-violent criminal, pleading guilty and accepting responsibility.”
The submission stated that he was “disciplined and humbled” and “torturing daily by his misdeeds and the pain he caused.”
Maski was arrested and charged in 2023. His company had filed for bankruptcy last year after a loss in the crypto market.
Prosecutors said Maski presented Celsius as a “modern bank,” but it was a “dangerous investment fund,” where Celsius could use its clients’ money to manipulate the market for cell tokens to sell its own holdings that exceed the market value.
