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Alex Mashinsky, the disgraced founder of Celsius Network, was sentenced to 12 years in prison after orchestrating a $7 billion value fraud that devastated hundreds of thousands of investors. Known for the slogan “unbank yourself,” Mashinsky’s actions led to massive financial losses before his downfall was exposed.
Crypto founder Alex Mashinsky, now jailed for 12 years over $7b in value fraud, had pleaded guilty to securities and commodities fraud charges back in December. Federal prosecutors revealed that Mashinsky personally earned $48 million while driving billions in investor losses, primarily by manipulating the value of Celsius Network’s token, Cel.
The Department of Justice, alongside dozens of defrauded victims, pushed for a maximum 20-year sentence. However, despite Mashinsky’s request for a lenient term of just over a year citing alleged remorse, the court imposed a 12-year prison term.
Celsius Network Collapse and Investor Fallout
Mashinsky’s downfall began in 2022 when Celsius abruptly froze customer withdrawals, citing “extreme market conditions.” Shortly after, the crypto bank filed for bankruptcy, revealing a staggering $1.19 billion hole in its finances—leaving customers without access to their funds while dismissing growing fears as “misinformation.”
In 2023, the Federal Trade Commission (FTC) finalized a $4.7 billion settlement with Celsius Network, permanently banning the platform from managing consumer assets. Investigators described the operation as an “old-fashioned swindle,” where Mashinsky and his team falsely assured users their deposits were safe and accessible at all times.
Throughout the trial, victims painted a bleak picture of the emotional and financial devastation Mashinsky caused. Many accused him of exploiting his image as a “family man” to gain trust, only to ruthlessly wipe out life savings. In victim impact statements, stories surfaced of retirees becoming homeless, families torn apart, and even suicides linked to the Celsius collapse.
Victim Rien Vanmarcke recounted how persuading his aging mother to invest ended in heartbreak, while lamenting how Mashinsky’s family appeared to mock victims with “unbankrupt yourself” merchandise and social media posts flaunting luxury lifestyles.
Another victim, Daniel Frishberg, who was still in high school when Celsius collapsed, reflected on losing 70 per cent of his holdings. “I am fortunate to be young and have time to recover, unlike many others,” he said.
With the crypto founder jailed for 12 years over $7b in value fraud, Mashinsky’s sentencing serves as a stark reminder of the dangers lurking in the unregulated world of cryptocurrency. His conviction stands as a major victory for regulators, but for many victims, the emotional and financial scars may never fully heal.
