US DOJ Demands 20-Year Sentence for Ex-Celsius CEO in $7 Billion Crypto Fraud Case: Will Justice Be Served?

US DOJ Pushes For 20-Year Sentence For Former Celsius Ceo Over $7 Billion Crypto Fraud

Once celebrated as a crypto pioneer, 59-year-old Alex Mashinsky is now facing up to 20 years in prison as the US Department of Justice (DOJ) seeks a penalty befitting the scale of the alleged fraud that devastated thousands of investors.

Celsius, once a prominent crypto lending platform, collapsed in 2022, leaving users unable to access billions in crypto assets.

The DOJ’s sentencing memorandum, filed on 28 April, condemns Mashinsky’s actions as a deliberate and calculated scheme that caused immense financial harm.

How Did Mashinsky Deceive Customers And Benefit Personally?

At its peak in 2021, Celsius Network boasted over $20 billion in crypto assets.

Mashinsky marketed the platform as a trustworthy alternative to traditional banks, promising high returns with minimal risk.

However, prosecutors argue that these promises were a facade, masking reckless and dangerous business practices.

Celsius took uncollateralised loans and made speculative trades, all while falsely assuring customers that their deposits were secure.

The memorandum reveals that Mashinsky personally profited from his role in the fraudulent activities.

According to the DOJ, he sold more than $48 million worth of Celsius's proprietary CEL tokens at artificially inflated prices, while publicly claiming to “HODL” them alongside his customers.

Billions In Losses For Celsius Customers

Celsius’s downfall in July 2022 triggered a wave of financial losses, with roughly $4.7 billion in customer funds trapped after the platform froze withdrawals.

The situation worsened in the following years, as the cryptocurrency market recovered.

By 2024, prosecutors estimate that the total loss has ballooned to nearly $7 billion, exacerbated by the so-called “Trump-trade” rally that inflated crypto asset values.

Despite these staggering losses, Mashinsky has consistently refused to take responsibility.

In his December 2024 guilty plea, he admitted to misleading customers about the safety of their deposits and manipulating the value of the CEL token.

Yet, he continues to deflect blame, pointing to market volatility, regulatory issues, and even the victims themselves as the primary causes of the collapse.

Why Is the DOJ Pushing for a Harsh Sentence?

In their memorandum, prosecutors argue that Mashinsky’s actions were not the result of poor judgment or bad luck.

They assert that his deliberate decisions to deceive and manipulate for personal gain were calculated, with disastrous consequences for those who trusted him.

A lenient sentence would fail to reflect the magnitude of Mashinsky's actions, sending the wrong message to other executives in the cryptocurrency industry.

According to DOJ,

“The Court should sentence Alexander Mashinsky to twenty years’ imprisonment as just punishment for his years-long campaign of lies and self-dealing that left in its wake billions in losses and thousands of victimised customers.”

Judge John G. Koeltl will deliver his final verdict on 8 May 2025, with Mashinsky facing the prospect of spending the next two decades in prison if the DOJ’s request is granted.

Should the sentence be imposed, Mashinsky would be nearly 80 by the time he is released.