New York (AFP) – The founder and former CEO of bankrupt cryptocurrency trading platform Celsius, Alexander Mashinsky, was sentenced Thursday to 12 years in prison on fraud charges. Mashinsky, 50, pleaded guilty last December to securities fraud in a deal that reduced the level of charges he faced.
The sentence comes down nearly three years after the startup’s collapse as a cryptocurrency platform, which offered customers the ability to invest in digital currencies, including its own coin, CEL. According to the indictment, Celsius executives took more than $4 billion in customers’ assets to finance the platform’s operations, make unsecured loans, and invest in high-risk items. Mashinsky was also accused of manipulating the price of CEL by using customers’ funds to purchase the currency, artificially inflating its price.
At its peak in late 2021, Celsius had more than one million clients and held more than $25 billion in assets. But the company hit hard times in the spring of 2022 as the value of cryptocurrencies plummeted. Facing deep customer withdrawals, Celsius on June 12, 2022, froze over $4.7 billion in customer accounts before filing for bankruptcy protection a month later.
A progress report published in March found that 93 percent of the frozen assets had been recovered and returned to former Celsius customers. The 2022 cryptocurrency collapse affected a number of other startups in the field, including FTX, the second-largest crypto exchange, which filed for bankruptcy in November 2022.
© 2024 AFP
