Prosecutors Seek 20-Year Sentence for Celsius Founder Alexander Mashinsky
On Monday, April 28, 2025, prosecutors filed a sentencing memorandum in the U.S. District Court for the Southern District of New York, urging a federal judge to impose a 20-year prison sentence on Alexander Mashinsky, the founder of the collapsed cryptocurrency platform Celsius. The government accused Mashinsky of orchestrating a prolonged scheme of deception and self-dealing that resulted in billions of dollars in losses for thousands of customers.
In a 100-page filing, prosecutors stated that Mashinsky gained the trust of hundreds of thousands of investors who believed their funds were secure with Celsius. However, they alleged this trust was built on false claims about the company’s financial health and the handling of customer deposits. Mashinsky pleaded guilty to two counts of commodities fraud and securities fraud, with his sentencing scheduled for May 8, 2025. His legal team has requested a reduced sentence of one year and one day, arguing that Mashinsky acted with good intentions.
The government’s memorandum highlighted Mashinsky’s lack of remorse, accusing him of using evasive language to deflect responsibility. Prosecutors noted that Mashinsky attributed his actions to excessive enthusiasm for Celsius, misplaced trust in subordinates, unfavorable market conditions, and regulatory challenges, while also blaming his customers. They argued that his refusal to acknowledge wrongdoing demonstrates an ongoing risk to the public.
Mashinsky, alongside Celsius Chief Revenue Officer Roni Cohen-Pavon, was accused of manipulating the value of Celsius’ CEL tokens, linked to bitcoin, by falsely claiming $50 million in sales. Prosecutors alleged Mashinsky sold his own CEL tokens for approximately $48 million in illicit profits, which funded a lavish lifestyle, including properties in Texas, Manhattan, and the Hamptons. Cohen-Pavon pleaded guilty in September 2023 and agreed to cooperate with authorities.
According to the filing, Celsius managed $30 billion in assets in early 2022, but the funds rapidly depleted before the company halted customer withdrawals and filed for bankruptcy in the summer of 2022. Prosecutors claimed Mashinsky misrepresented Celsius’ initial CEL token offering, stating it raised $50 million when it actually collected $32 million. To cover the shortfall, Mashinsky arranged for an entity, AM Venture Holdings, to purchase unsold tokens with a promise to repay Celsius within 90 days—a commitment he allegedly failed to fulfill while continuing to tout the inflated fundraising figure.
The government further alleged that Mashinsky misled customers about the risks associated with their investments. He claimed Celsius employed a market-neutral strategy to shield funds from cryptocurrency market volatility, but the company frequently took speculative positions on bitcoin and other assets, often at Mashinsky’s direction. Additionally, prosecutors said Mashinsky set artificially high customer reward rates, disregarding senior staff advice, to create a false impression of profitability tied to the company’s revenue.
Prosecutors described Mashinsky’s actions as a textbook case of fraud, alleging he created a valueless CEL token, manipulated its market price, and sold his holdings for significant personal gain while concealing his actions. The filing emphasized that Mashinsky’s misrepresentations led customers to believe Celsius’ high reward rates reflected a successful business model.
In his own sentencing memorandum filed earlier in April 2025, Mashinsky acknowledged making misleading statements, which he said he regretted and took responsibility for. He described some falsehoods as errors in judgment made to protect Celsius during a turbulent period in the cryptocurrency market. In his guilty plea, Mashinsky admitted to falsely claiming in a 2021 interview that Celsius had regulatory approval and lying about not selling his CEL tokens in September 2019.
Please contact BlockTribune for access to a copy of this filing.
