Former Celsius CEO Pleads Guilty to Fraud in Token Manipulation Scheme

Alex Mashinsky, the co-founder of Celsius Network, has admitted to charges of fraud related to his role in the company's downfall.

This marks a key moment in the ongoing legal aftermath of the 2022 crypto market crash.

Mashinsky has acknowledged manipulating the value of Celsius’s CEL token, which allegedly attracted investors and helped him personally profit by $42 million. At a court hearing in Manhattan, he confirmed he would plead guilty to two counts: commodities fraud and a scheme to artificially inflate CEL’s price. The most serious charge could carry up to 20 years in prison.

Celsius’s bankruptcy was one of the first signs of the crypto market’s troubles, following other major failures like the collapse of FTX. Mashinsky’s actions, including misleading customers and orchestrating trades to boost CEL’s value, are central to the charges. Investigations suggest the company spent vast amounts, sometimes using customer funds, to manipulate CEL’s market price.

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In a significant move, Mashinsky’s former legal advisor, Roni Cohen-Pavon, also pleaded guilty and agreed to cooperate with authorities. Mashinsky’s decision to change his plea means he will avoid a trial that was set for January, potentially leading to a lighter sentence.

The case continues to unravel the mismanagement at Celsius, with efforts underway to repay creditors. Last week, the company announced plans to distribute $127 million to its creditors in Bitcoin or USD. Additionally, Celsius has filed a lawsuit against Tether, accusing the company of misusing over $2 billion in Bitcoin collateral.

Mashinsky’s guilty plea marks a crucial step in the ongoing accountability for those responsible for destabilizing the cryptocurrency sector.

Alexander Stefanov