Ukrainian national sentenced to 12 years in US prison for financial fraud
Alex Mashinsky, the founder and former CEO of the failed cryptocurrency lending company Celsius Network, was sentenced on May 8 to 12 years in prison after pleading guilty in December 2024 to securities fraud and commodity fraud, according to Reuters.
Photo: Vladyslav Yushynov | Dreamstime.com
On May 8, 2025, U.S. District Judge John Koeltl in Manhattan sentenced Alexander Mashinsky, the founder and former CEO of the bankrupt cryptocurrency platform Celsius Network, to 12 years in prison. Mashinsky, 2024, pleaded guilty in December 59 to securities fraud and commodities fraud. The sentence includes three years of post-release supervision, forfeiture of $48,4 million, and a $50 fine.
Prosecutors sought a 20-year sentence, calling it “fair punishment” for defrauding thousands of clients, causing billions of dollars in losses and making Mashinsky a $48 million personal gain. Mashinsky, citing remorse and a desire to improve for the sake of his family and clients, asked for just a year and a day in prison. His case has become one of the most significant in a series of criminal cases related to the 2022 cryptocurrency crash.
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Enrichment and fraud scheme
Mashinsky and his team at Celsius Network orchestrated a multi-year scheme by misleading customers about the platform’s security and manipulating the price of its native token, CEL. Celsius, promising high rates of up to 18,6% on the program and easy loans, positioned itself as “the safest place for crypto.” Mashinsky personally promoted the platform, claiming it was safer than banks, but misrepresented its profitability, risk, and operations. The company spent hundreds of millions of dollars, including customer deposits, to buy CEL on the open market, artificially inflating its value. As Roni Cohen-Pavone, former Celsius chief revenue officer, admitted, “The value was fake, based on millions spent.”
Mashinsky publicly denied selling CEL, but he himself sold large volumes, earning about $44 million, according to Arkham Intelligence. In May 2022, amid a massive withdrawal of client funds, he withdrew $10 million of his assets, claiming it was for taxes and inheritance. By June 2022, Celsius had suspended withdrawals, leaving clients with $4,7 billion in inaccessible assets. A January 2023 report by expert Shoba Pillai found “clear fraud”: Mashinsky lied in his weekly “Ask Mashinsky Anything” broadcasts.
Riding the Cryptocurrency Boom
Founded by Mashinsky in 2017 in Hoboken, New Jersey, Celsius Network offered lending and custody services for crypto assets such as Bitcoin and Ethereum. The platform attracted customers with high rates (up to 17% per annum) and a message to “ditch the banks.” By the fall of 2021, Celsius had become one of the largest crypto platforms with $25 billion in assets. However, a $1,19 billion balance sheet deficit and risky investments led to bankruptcy in July 2022, after panicked withdrawals by customers amid a crypto market collapse.
The cryptocurrency market, which began with Bitcoin in 2009, boomed from 2017 to 2021, when crypto asset prices soared and platforms like Celsius, FTX, and Binance attracted billions. Promises of high returns and decentralization lured retail investors, but a lack of regulation and transparency created risks. The 2022 crash, caused by falling prices and bankruptcies of major platforms, exposed systemic problems: manipulation, incompetent asset management, and fraud. Celsius became a symbol of these problems, and Mashinsky’s departure as CEO in September 2022 only confirmed the crisis.
Originally from the USSR
Alexander Mashinsky was born in October 1965 in the Soviet Union (more precisely, in Ukraine) to a Jewish family. In the 1970s, his family emigrated to Israel, where he became interested in inventing by tapping into telephone lines and reselling confiscated goods at auctions. He studied electrical engineering at several universities but did not graduate. From 1984 to 1987, Mashinsky served in the Israeli army, and in 1988 he moved to New York.
His career has spanned technology and innovation. In the 1990s, he founded VoiceSmart, a pioneer in VoIP telephony, and Arbinet, a capacity trading platform. (A capacity trading platform is a specialized electronic system that allows telecommunications companies to buy and sell unused telephone or Internet capacity for voice or data traffic. — Note. )
In 2004, Mashinsky founded GroundLink, a Wi-Fi-enabled limo booking service, and Q-Wireless became part of Transit Wireless, which brought Wi-Fi to the New York City subway. From 2014 to 2015, he led Novatel, but was fired for refusing to relocate to San Diego. In 2016, Mashinsky briefly ran fintech RTX, but left after a dispute. In 2017, he founded Celsius, his most high-profile, but ultimately unsuccessful, project.
The Wall Street Journal called him "a brash serial entrepreneur with a flood of ideas" in 2022, but conflicts and risky decisions have plagued his career.
Alexander Mashinsky’s wife, Chrissy Mashinsky, born Christine Mehan, lives in New York City with the couple’s six children. Chrissy owns a retail company that found itself in controversy in September 2022 for selling T-shirts with the slogan “Unbankrupt Yourself,” which was seen as a mockery of Celsius’s slogan, “Unbank Yourself.” The shirts came shortly after Celsius suspended customer withdrawals in June 2022, freezing $4,7 billion in assets, and then filed for bankruptcy. Customers who lost savings, including retirement savings, found the move offensive.
Dangerous Crypto Exchanges
Mashinsky’s case is not the only one in the crypto industry. Sam Bankman-Fried, the founder of FTX, who stole $10 billion in client funds, received 25 years in prison for fraud. He appealed, but his case, like the Celsius case, showed how platforms use client assets for risky transactions without revealing it to investors.
Binance paid a $2023 billion fine in 4,3 for violating anti-money laundering laws, and its CEO Changpeng Zhao pleaded guilty. These cases highlight systemic risks: lack of regulation, token manipulation, and lack of transparency.
The problems with cryptocurrency exchanges include weak oversight and control, vulnerability to hacker attacks, and potential for fraud. Investors risk losing funds due to bankruptcies, as in the case of Celsius, or data theft. To protect themselves, experts recommend:
— Check the platform’s licenses and reputation: make sure the exchange is regulated (for example, by the SEC or CFTC in the US).
— Store assets in cold wallets: This minimizes the risk of hacking. (A cold wallet, or cold storage, is a method of storing cryptocurrencies in which the private keys needed to access digital assets are kept offline, i.e. not connected to the internet. This makes cold wallets one of the safest methods of protecting cryptocurrencies from hacker attacks, exchange hacks, and other online threats often associated with crypto exchanges. — Note.)
— Avoid promises of unrealistic returns: high rates, like Celsius' 17%, often signal risks.
— Diversify your investments: don’t keep all your assets on one platform.
— Monitor news and reports: Independent audits and reviews can reveal problems.
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