Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Celsius Founder Sentenced to 12 Years for Crypto Fraud
Enforcement | May 9, 2025
Image: Freepik
Celsius Founder Alex Mashinsky Lied to Customers and Inflated His Company’s Token
Alex Mashinsky, Founder of the crypto lending platform Celsius, has been sentenced to 12 years in prison for defrauding customers and manipulating the price of his company’s digital token.
See: Unveiling the Celsius and 3 Arrows Capital implosions
According to a press release issued May 8, 2025 from the U.S. Department of Justice, Mashinsky promised people their money would be safe and earn high rewards on Celsius. However, courts found that instead he used customer deposits to make risky bets and secretly boost the price CEL, Celsius’s own token. At the company’s peak, Celsius held about $25 billion in customer assets. When Celsius collapsed in July 2022, around 600,000 customers lost access to $4.7 billion worth of crypto. The sentence came from a U.S. court after Mashinsky admitted in December 2024 that he committed fraud and misled investors.
Jay Clatyon, U.S. Attorney said:
“Mashinsky made tens of millions of dollars while his customers lost billions... The rules against fraud still apply.”
As reported by Reuters, Mashinsky also said publicly that he wasn’t selling CEL tokens, but in fact he was and made about $48 million in profit from doing so. Further, he took out $8 million of his own money just before the company blocked customer withdrawals. He told customers that Celsius was financially strong even that he knew it was failing.
See: Celsius Creditors to Return Funds Withdrawn Pre-Bankruptcy
In addition to 12 years prison time, Mashinsky must pay a fine and give up his profits from the token sales.
Conclusion
Crypto companies must follow the same rules as everyone else. Misleading customers and manipulating markets has serious consequences. As more and more people engage with digital assets, trust and transparency is critical for the future of finance.
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