Discover top fintech news and events!
Subscribe to FinTech Weekly's newsletter
Read by executives at JP Morgan, Coinbase, Blackrock, Klarna and more
Alexander Mashinsky, the founder and former CEO of collapsed crypto platform Celsius, has been sentenced to 12 years in prison for fraud, closing one of the most high-profile criminal cases to emerge from the crypto industry's turbulent downturn.
The sentencing was handed down nearly three years after Celsius froze billions in customer assets and filed for bankruptcy amid plummeting digital asset prices and allegations of mismanagement. Mashinsky, 50, had pleaded guilty to securities fraud in December 2024 as part of a deal that reduced the charges brought against him.
Misuse of Customer Funds and Market Manipulation
At the heart of the case was the misuse of more than $4 billion in customer assets. According to the indictment, Celsius executives used these funds to finance operating expenses, issue unsecured loans, and engage in risky investments. Mashinsky was also accused of manipulating the value of Celsius’s proprietary token, CEL, by directing the use of customer funds to purchase the coin and artificially inflate its price.
Celsius, which once held over $25 billion in assets and served more than a million users, collapsed in the spring of 2022 as market conditions turned and trust in crypto lenders began to unravel. On June 12, 2022, the platform froze over $4.7 billion in customer accounts, filing for bankruptcy a month later.
A March 2025 progress report revealed that 93% of frozen funds had since been recovered and returned to former customers — a relatively high recovery rate compared to other crypto collapses.
Broader Industry Context
The sentencing of Mashinsky comes as part of a broader wave of legal consequences tied to the crypto market’s 2022 collapse. Celsius’s downfall occurred in the same year as the bankruptcies of other major players like FTX, whose founder, Sam Bankman-Fried, is also serving a prison sentence for fraud.
While the cryptocurrency industry has shown signs of recovery, the Celsius case remains a reminder of the systemic risks and governance failures that plagued many platforms during the last bull run. It also signals a stronger enforcement environment, even as regulatory interpretations evolve under new U.S. leadership.
Looking Ahead
The Celsius case is likely to remain a reference point in regulatory and legal discussions surrounding crypto custody, token issuance, and the responsibilities of centralized platforms.
With criminal enforcement now more closely tied to user fund mismanagement, the sentencing may influence how fintech and digital asset firms approach transparency and operational controls going forward.
