
Founder of cryptocurrency firm Celsius sentenced for fraud
Erin Bradbury - 9 June 2025
All it took was the perfect storm in 2022 for cryptocurrency prices to tank, and some exchange platforms just couldn’t weather it. As their value fell dramatically, customers quickly sought to withdraw their deposits, and it soon became evident that some of the numbers weren’t quite right. Most famously, or rather infamously, Sam Bankman-Fried – whose crypto company, FTX, peaked at $32 billion– was sentenced to 25 years after a leaked balance sheet unearthed his fraudulent business practices. Another struggling Bitcoin mining and cryptocurrency platform, Celsius Network,had $25 billion in assets at its peak, and turned to Chapter 11 bankruptcy to protect itself during this fallout.
However, things took a turn last month when Alex Mashinsky, founder and former chief executive of Celsius, was sentenced to 12 years in prison after pleading guilty to securities and commodities fraud. It was found that Mashinsky misled customers about the platform’s success and the investments made with their funds. On top of this, the company artificially manipulated the price of CEL (Celsius’ token), and Mashinsky covertly sold his own tokens at these rates. According to US Attorney Damian Williams, Mashinsky used “catchy slogans like ‘Unbank Yourself’” to promise customers that their crypto would be stored as safely as a bank stores money but, unlike a bank, Celsius would return most of its profits to its users. However, this business model was far from the reality, as Mashinsky ended up making increasingly risky investments to try and cover up Celsius’ faults, meaning that customers’ money was used to inflate the price of the token.
This is just one example of the ways in which cryptocurrency can be used for investment fraud and money laundering, and may well justify many people’s growing concerns around digital currency. Here in the UK, around 12% of adults were found to own crypto in 2024, a 4% increase from 2021. As such, those with an interest in cryptoassets should also be aware that, under the government’s ‘Plan for Change’ to drive growth and innovation, crypto platforms will have to follow new and clearer rules. For example, crypto companies will be subject to stricter regulations, such as greater transparency and a focus on consumer protection, just like standard finance firms.