Alexander MashinskyThe former CEO of now-bankrupt cryptocurrency lender Celsius has pleaded guilty to two counts of fraud, and faces a possible maximum sentence of 30 years in prison.
This development comes on the heels of multiple charges filed by the US Department of Justice (DOJ), which originally charged him with seven counts of fraud, conspiracy and market manipulation.
US Attorney Calls Celsius Fraud System One of the Largest Cryptocurrency Schemes
Mashinsky pleaded guilty in a New York courtroom, Recognition to commit commodity fraud and securities fraud related to two deceptive schemes related to Celsius, which he co-founded as a purported “bank” for the cryptocurrency industry.
In the first scheme, Mashinsky was revealed to have misled clients about “fundamental aspects” of the company’s operations, including its profitability and the nature of investments made with it. Clients’ money.
In the second case, the US Attorney’s Office for the Southern District of New York alleges that the founder of Celsius engaged in “unlawful price manipulation” of Celsius’ proprietary token, CEL, while “secretly” selling his own holdings at artificially inflated prices.
Mashinsky agreed to forfeit more than $48 million in proceeds from these illegal activities as part of the plea agreement.
US Attorney Damien Williams described Mashinsky’s actions as orchestrating “one of the largest frauds in the cryptocurrency industry.”
Williams said Mashinsky marketed Celsius as a safe alternative to Crypto investmentsclaiming that customer funds were safe and that profits would be returned to users — claims that were ultimately proven false, according to the lawyer’s statement.
A closer look at the collapse of the cryptocurrency giant
At its peak, Celsius managed approximately $25 billion in assets and attracted a large business base. Retail investors They were lured by the platform’s offers, including an “earn-in” program that promised high returns in exchange for clients’ assets.
However, with the company facing increasing financial pressure, Mashinsky continued to reassure clients of its stability, even as he withdrew significant personal assets from the platform.
Court documents revealed that Mashinsky and other Celsius executives engaged in a “year-long scheme” to mislead customers about the value and stability of the CEL token.
Authorities also allege that it manipulated the price of the token by using customer funds to “back” it. Market value Without disclosing these actions to investors. This manipulation allowed Mashinsky to profit from his sales of CEL.
The situation came to a head in June 2022 when Celsius suddenly halted all customer withdrawals, leaving hundreds of thousands of investors unable to access approximately $4.7 billion of their cryptocurrency assets.
Shortly thereafter, the company filed for Chapter 11 bankruptcy, marking the dramatic collapse of one of the largest platforms in the cryptocurrency sector.
At the time of writing, CEL is trading at $0.2690, up 9% over the past 24 hours. Despite this rebound, the token is still trading down 96% from its record high of $8 in 2021.
Featured image by Spiegel, chart from TradingView.com
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