As Alexander Mashinsky enters a guilty plea to masterminding one of the largest scams in the cryptocurrency business, the web of falsehoods around the billionaire comes to an end.#NewYorkNY #NewYork #Crime #NewYork
New York, New YorkThe creator and former CEO of Celsius Network, Alexander Mashinsky, entered a guilty plea to fraud charges, which is a significant step for the cryptocurrency sector. After confessing to masterminding two fraudulent operations that defrauded investors and caused the cryptocurrency platform to crash, Mashinsky, 58, faces a maximum sentence of 30 years in jail. Mashinsky agreed to forfeit $48 million in gains from his illegal operations, making the case one of the biggest fraud scandals in the crypto business.
Mashinsky s Fraudulent Schemes and Guilty Plea
Mashinsky entered a guilty plea on Tuesday to one count of securities fraud and one count of commodities fraud related to his activities at Celsius. Mashinsky has consented to forfeit $48 million in illegal gains, according to confirmation from the U.S. Attorney’s Office for the Southern District of New York.
According to Southern District of New York U.S. Attorney Damian Williams, Alexander Mashinsky masterminded one of the largest scams in the cryptocurrency sector. By making misleading claims that their investments were low-risk, he tricked regular, retail cryptocurrency investors into spending billions of dollars on Celsius.
Using memorable catchphrases like “Unbank Yourself,” he said, Mashinsky assured customers that Celsius would protect their cryptocurrency just as securely as bank funds, but that, in contrast to banks, Celsius would give back the majority of its earnings to its clients. Celsius was actually never lucrative.
How Celsius Manipulated the Crypto Market
Celsius Network offered rewards on cryptocurrency assets and loans backed by those same assets, positioning itself as a secure platform for cryptocurrency investors.
Mashinsky made false claims about the platform’s profitability, the dangers involved, and the safety of Celsius’ yield-generating operations in order to draw customers. Celsius claimed to have over $25 billion in assets by the fall of 2021, making it one of the biggest cryptocurrency platforms.
Behind the scenes, though, Celsius was misleading investors with dangerous business tactics. Mashinsky and other executives manipulated the price of Celsius’s proprietary cryptocurrency token, CEL, in order to support the platform’s worth. Celsius used consumer funds to buy CEL, spending hundreds of millions of dollars without telling users about it. Mashinsky profited from the artificial inflation of the CEL price by selling his own CEL assets at these high prices.
“The problem is that people are selling [CEL] and no one is buying except for us,” acknowledged Roni Cohen-Pavon, Celsius’s Chief Revenue Officer, who has also pleaded guilty to manipulating the price of CEL. In a private message to Mashinsky, she added, “the main problem was that the value was fake and was based on us spending millions (~8M a week and even more until February 2020) just to keep it where it is.”
Celsius Collapse and Its Impact on Customers
The business’s financial condition became more precarious as the fraudulent activities persisted. The sudden suspension of all customer withdrawals by Celsius in June 2022 prevented hundreds of thousands of investors from accessing their $4.7 billion worth of cryptocurrency investments. One of the most well-known platforms in the cryptocurrency industry collapsed when Celsius declared Chapter 11 bankruptcy a month later.
Mashinsky’s actions went counter to his promises to consumers that Celsius had the financial capacity to fulfill withdrawal requests. Mashinsky removed $8 million in non-CEL cryptocurrency assets from Celsius despite claiming stability. Concerns regarding the company’s operations were further heightened by this action.
As part of his guilty plea, Mashinsky has consented to forfeit $48 million in revenues from the sale of his CEL interests. He might receive a 30-year prison sentence for his involvement with the fraud schemes that brought Celsius to its demise when he is sentenced on April 8, 2025.
CONNECTED TOPICS: New York Crime
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