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Alexander Mashinsky is an Israeli-American businessman, entrepreneur, and fraudster. He cofounded Celsius Network, a failed cryptocurrency lending company, and served as its CEO for a while.
Mashinsky may spend decades behind jail after entering a guilty plea to state fraud charges on Tuesday, acknowledging that he had deceived clients about the company. He filed a plea to trade and financial fraud in a federal court in New York.
Alexander Mashinsky Pleads Guilty
Before Celsius filed for bankruptcy in 2022, he acknowledged unlawfully changing the price of the company's own cryptocurrency token. He secretly sold his own tokens at ridiculous prices to profit over $48 million.
He acknowledged in court that he had openly implied regulatory approval for the company's actions in 2021 because he was aware that consumers "would find false comfort" in that. He further claimed that, despite his claims to the public to the contrary, he was selling cryptocurrency tokens in 2019. He claimed to be aware that this would also give customers false comfort.
The business positioned itself to clients as a cutting-edge bank where they could securely deposit cryptocurrency assets and earn interest. Mashinsky declared, "I accept full responsibility for my actions," referring to offenses that occurred between 2018 and 2022.
One of the Biggest Fraud
Mashinsky reportedly "planned one of the biggest frauds in the crypto sector," according to a statement from U.S. Attorney Damian Williams. Williams company's assets allegedly reached a height of almost $25 billion, making it one of the biggest cryptocurrency platforms globally.
He claimed that Mashinsky promised potential clients that their money would be just as safe in cryptocurrency accounts as it would be in a bank. He used memorable catchphrases like "Unbank Yourself." Prosecutors said that Mashinsky and his coworkers had increased the value of the Celsius cryptocurrency by using customer deposits to finance market transactions.
How did he manage to do this?
According to Williams:
Machinsky left his clients "holding the bag when the business went bankrupt" after making tens of millions of dollars by trading his own CEL tokens at high rates.
According to the charges, Mashinsky advertised Celsius via media appearances and his social media profiles. He also advertised on Celsius' website and a weekly broadcast of the "Ask Mashinsky Anything" session that was uploaded to Celsius' site and YouTube channel.
According to the complaint, Mashinsky disregarded the warnings of Celsius staff members from various departments who saw incorrect and misleading comments during the sessions. In a plea deal with lawyers, Mashinsky agreed to lose more than $48 million, the money he reportedly received from selling his company's token, and face a maximum sentence of 30 years in prison.
