Celsius Founder Alex Mashinsky Hit With a 12-Year Prison Sentence for Crypto Fraud

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Mashinsky was charged with misleading investors and customers about Celsius operations.

Restructuring of Celsius protocol under a creditor-owned Bitcoin mining has been ongoing.

Alex Mashinsky, the founder and former CEO of defund lending protocol Celsius (CEL), has been sentenced to a 12-year prison term on Thursday, May 8. This decision was made by United States District Judge John G. Koeltl at Manhattan’s Southern District, who found Mashinsky guilty of engaging in a fraudulent scheme to deceive investors.

Although the federal prosecutor had initially sought a 20-year prison term for Mashinsky, the final sentence was 12 years. Mashinsky had pleaded guilty to two counts of fraud, which included commodities fraud and securities fraud. As part of his plea deal, Mashinsky agreed to forfeit $48 million and waived his right to appeal any sentence up to 30 years.

Despite the forfeiture of funds, Celsius still faced significant financial challenges, with a deficit of over $1 billion. To address this issue, the court approved a restructuring plan that involved transforming Celsius into a creditor-owned Bitcoin mining company called Ionic Digital LLC.

What Next for Crypto Market After Mashinsky’s Sentencing

Following the 2022 bear market in the cryptocurrency industry, triggered by events like the Terra Luna and FTX collapse, regulators in various jurisdictions have taken steps to safeguard web3 investors. Figures like Sam Bankman Fried serve as important examples for web3 developers looking to navigate the evolving crypto regulatory landscape.

With clearer regulatory frameworks in place, the crypto market is poised for significant growth in the coming years. Institutional investors have played a key role in pushing for greater recognition of digital assets as viable investment opportunities, prompting global lawmakers to take digital currencies more seriously as battle-tested assets.