[NEWS] Founder of failed cryptocurrency lending service Celsius pleads guilty to fraud in plea deal

Alex Mashinsky, founder and former CEO of Celsius Network, a cryptocurrency lending service that collapsed in 2022, pleaded guilty to some of the charges on the 3rd.

Mashinsky was indicted on seven charges, and admitted to two of them through a plea bargain. These two charges could carry a maximum sentence of 30 years in prison.

Mashinsky admitted to two counts: product fraud and price manipulation of CEL, the token issued by the company. In particular, regarding the product fraud, he falsely explained the Celsius Earn program, and made investors sell Bitcoin (BTC), unfairly earning a profit of $42 million (approximately 6.3 billion yen). He also admitted that his explanation that Celsius was approved by regulatory authorities and his statement that he had not sold CEL were false.

Mashinsky apologised when he pleaded guilty to two counts of fraud, saying: "What I did was wrong and I will do whatever it takes to make it right."

He is due to be sentenced on April 8 next year.

Celsius filed for Chapter 11 bankruptcy in July 2022 and went bankrupt. The company was in a difficult financial situation due to the impact of the Terraluna incident that occurred in the same year.

Mashinsky was arrested and sued the following year, but he consistently maintained his innocence.

In the United States, founders of cryptocurrency-related companies have been convicted one after another.

Sam Bankman-Fried, former CEO of FTX, a major cryptocurrency exchange that collapsed in 2022, was sentenced to 25 years in prison and fined $11 billion (approximately 1.65 trillion yen) for fraud and other charges.

In addition, CZ (Changpeng Zhao), founder and former CEO of major cryptocurrency exchange Binance, was sentenced to four months in prison in June this year for violating anti-money laundering measures and other offenses, and served his sentence.

Reference: Reuters
Image: Shutterstock

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