Crypto News: Celsius Network Fallout Continues as Ex-CEO Gets 12-Year Sentence

• Alex Mashinsky was given 12 years in prison for deceiving Celsius customers and losing billions from investors.
• The company disappeared in 2022 after closing withdrawals and concealing risky bets placed with customer resources.

Alexander Mashinsky, the founder and former CEO of Celsius Network, has been sentenced to 12 years behind bars for misleading investors and misusing customer funds. U.S. District Judge John G. Koeltl passed the sentence branding Mashinsky’s conduct as “extremely serious.” The court found out that he enriched himself to over $45 million at the expense of many investors left financially wrecked.

We are now halfway through sentencing for Celsius founder Alex Mashinsky

Here's all the drama from inside the courtroom, including when Mashinsky started to cry as he addressed the court pic.twitter.com/8WcWMqGgO9

— Zack Guzmán (@zGuz) May 8, 2025

Prosecutors claimed that Mashinsky had developed a fraudulent platform under the cover of security and high returns. Customers were assured that their funds were safe, but the company made risky positions with billions of dollars in digital assets. Celsius filed for bankruptcy in June 2022, following a sharp crypto downturn when it froze withdrawals following the collapse of Terra. 

Allison Nichols, Assistant U.S. Attorney, said that Mashinsky lured people with trust and gave them false hope. She told the court that his actions were cold and calculated and left victims with no real means of recovery. Testimonies of the victims showed that nearly 250 users died before they received restitution. One customer demanded the “harshest sentence” possible.

Collapse Triggers Civil Fallout and Restructuring

Celsius promised investors double-digit returns, making it a modern crypto bank. In fact, it experienced acute liquidity problems. Mashinsky’s defense acknowledges losing $590M, while The Chapter 11 bankruptcy filing indicates Celsius owes as much as $4.7B. Unfortunately, the platform does not have enough funds to pay all creditors and has only paid around $127M in the second phase of its repayment program. Estimated total losses are up to $7B, including the lost value of the project’s native token.

celsius paused customer withdrawals the day after this tweet accusing me of being paid to fud the company

today, alex mashinsky was sentenced to 12 years in jail for fraud pic.twitter.com/PzPx7C2TUc

— Mike Dudas (@mdudas) May 8, 2025

Court documents reveal that between 2018 and 2022, Mashinsky provided repeat false statements regarding Celsius’ financial prowess. He hid the high-stake bets and issued uncollateralized loans that crowded the customer funds into high-risk trades.

Although there are criminal penalties, Mashinsky still has to deal with civil litigation. A 180-page complaint as part of an adversary proceeding reveals more claims about the activities of Celsius and its bankruptcy.

Trump-Era Pardons Raise New Possibilities

As Mashinsky starts his sentence, there have been speculations surrounding the possibility of a presidential pardon. Financial crimes in the United States tend to be severely punished, but there are recent signs of change. The administration of President Donald Trump has shown clemency on several figures in the crypto space.

Notably, BitMEX co-founders Arthur Hayes, Benjamin Delo, and Samuel Reed were given presidential pardons despite the severity of their regulatory charges. It has been reported that Binance founder Changpeng “CZ” Zhao is also seeking a pardon.

With such a proposal, some observers question whether Mashinsky may also do the same, and maybe under the leniency regime of the Trump administration in the digital asset innovators. Even with no confirmation about a pardon request, the trend has aroused a lot of speculation in the industry.

Mashinsky’s sentence is one of the most lenient punishments from the fallout of crypto’s 2022 crash. Although some of the lost money can be recovered from Celsius customers, there is not a high probability of experiencing full financial restitution.