Alex Mashinsky of cryptocurrency firm Celsius Network sentenced to 12 years
Alex Mashinsky, the founder and former chief executive of bankruptcy cryptocurrency lender Celsius Network, was sentenced on Thursday to 12 years in prison after pleading guilty in December to securities fraud and commodities fraud.
Mashinsky's sentence was imposed by US District Judge John Koeltl in Manhattan, and is among the longest in a criminal case arising from the 2022 meltdown in cryptocurrency markets.
Sam Bankman-Fried, who led the FTX exchange, is serving a 25-year prison sentence after being convicted of fraud. He is appealing.
Federal prosecutors said Mashinsky, 59, misled customers about Celsius's safety, and artificially inflated the value of Celsius's proprietary token Cel.
They sought a prison term of at least 20 years, calling it 'just punishment' for Mashinsky's having victimized thousands of people and caused billions of dollars in losses, while drawing more than $48m of personal benefits.
'The case for tokenization and the use of digital assets is strong but it is not a license to deceive,' the the US attorney in Manhattan Jay Clayton said in a statement.
Mashinsky sought one year and one day in prison, saying he felt remorse and wanted to do right by his family and former Celsius customers. His sentence includes three years of supervised release and a $48.4m forfeiture.
Lawyers for Mashinsky were not immediately available for comment.
Founded in 2017, Celsius, based in Hoboken, New Jersey, filed for Chapter 11 bankruptcy in July 2022 after customers rushed to withdraw deposits as cryptocurrency prices fell.
Born in Ukraine, Mashinsky emigrated with his family to Israel, and moved to New York after visiting the city in 1988.
Cryptocurrency lenders have promised easy loan access and high interest rates to depositors while lending tokens to institutional investors, hoping to profit from the difference.
Celsius offered 17% interest on some deposits, but had a $1.19bn balance sheet deficit when it sought bankruptcy protection.
Mashinsky has also faced civil lawsuits by the US Securities and Exchange Commission, the US Commodity Futures Trading Commission, the US Federal Trade Commission and the New York attorney general Letitia James.
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