Founder and former CEO of a failed cryptocurrency lending platform Celsius network could face decades in prison after pleading guilty Tuesday to federal fraud charges, admitting he misled customers about the business.
Aleksandar Mašinski58, of Manhattan, pleaded guilty in federal court in New York to securities fraud.
He admitted to illegally manipulating the price of Celsius’ proprietary crypto token while secretly selling his tokens at inflated prices to pocket around $48 million before Celsius went bankrupt in 2022.
He admitted in court that in 2021 he publicly suggested there was regulatory approval for the company’s moves because he knew customers would “find false comfort” in that.
And he said he was selling crypto tokens in 2019 even though he told the public he wasn’t. He said he knew customers would take false comfort from that as well.
“I accept full responsibility for my actions,” Mashinsky said of the crimes that spanned from 2018 to 2022 as the company presented itself to clients as a modern bank where they could safely deposit crypto assets and earn interest.
U.S. Attorney Damian Williams said in a statement that Mashinsky “orchestrated one of the largest frauds in the crypto industry” as his company’s assets reportedly grew to around $25 billion at its peak, making it one of the largest crypto platforms in the world.
He said Mashinsky used catchy slogans like “Unbank Yourself” to lure potential clients with the promise that their money would be as safe in crypto accounts as it would be in a bank. Meanwhile, prosecutors said, Mashinsky and co-conspirators used client deposits to fund market purchases of the Celsius token to prop up its value.
Machinsky made tens of millions of dollars by selling his own CEL tokens at artificially high prices, leaving his clients “holding the bag when the company went bankrupt,” Williams said.
The indictment alleges that Mashinsky promoted Celsius through media interviews, his social media accounts and Celsius’ website, along with a weekly broadcast of an “Ask Mashinsky Anything” session that was posted on Celsius’ website and YouTube channel.
Celsius employees from several departments who noticed false and misleading statements at the meetings warned Mashinsky, but they were ignored, according to the indictment.
Mashinsky’s plea deal with prosecutors calls for him to be sentenced to up to 30 years in prison and forfeit more than $48 million, which is the amount of money he allegedly made from selling his company’s tokens.
The sentencing is scheduled for April 8.
