Alex Mashinsky, the founder of bankrupt cryptocurrency finance company Celsius Network, said Tuesday he intends to plead guilty to two counts of fraud.
The former CEO, 59, was indicted in July last year on seven counts of fraud, conspiracy and market manipulation. Federal prosecutors in Manhattan have alleged that Celsius deceived customers into investing and artificially inflated the value of its proprietary crypto tokens. He pleaded not guilty later that day.
In November, U.S. District Judge John Koeltl denied a motion by Mashinski to dismiss two criminal charges ahead of a trial scheduled for Jan. 28.
At a hearing for Keltl on Tuesday, Mashinski agreed to plead guilty to two of the seven charges originally indicted: commodity fraud and a fraudulent scheme to manipulate the price of Celsius’ internal tokens. said.
Mashinsky was one of several crypto tycoons charged with fraud after the 2022 crypto price slump led to the collapse of a number of companies, including the now-bankrupt exchange FTX. FTX founder Sam Bankman Fried was convicted in November 2023 of stealing approximately $8 billion from the exchange’s customers and was sentenced to 25 years in prison in March.
Celsius became one of the first companies in a wave of bankruptcies in the crypto sector in 2022 as token prices plummeted amid rising interest rates and persistently high inflation. The company filed for bankruptcy shortly after Singapore-based crypto hedge fund Three Arrows Capital and rival crypto finance company Voyager Digital filed for bankruptcy.
Federal prosecutors in Manhattan have charged Mashinsky and Celsius’ former chief revenue officer Roni Cohen-Pavon with manipulating the market for the company’s cryptocurrency token, commonly known as “Cell.” Cohen-Pavon pleaded guilty in September 2023 and agreed to cooperate with prosecutors’ investigation.
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Prosecutors said Mashinski also personally received about $42 million in proceeds from the sale of Cel tokens he held.
Founded in 2017, Celsius filed for Chapter 11 bankruptcy protection in July 2022 after customers rushed to withdraw their deposits in response to falling crypto prices. Many initially did not have access to their funds. The company emerged from bankruptcy on January 31st and shifted its focus to Bitcoin mining.
Cryptocurrency lenders such as Celsius have grown rapidly as cryptocurrency prices soared during the coronavirus pandemic. They promised easy lending access and amazing interest rates to depositors, then lent their tokens to institutional investors in hopes of profiting from the difference.
