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Celsius Founder Alex Mashinsky To Plead Guilty To Fraud Charges

Published

1 day ago

December 3, 2024

Alex Mashinsky, the founder and former CEO of Celsius Network, has agreed to plead guilty to two fraud charges following an indictment filed in July 2023. His defense attorney announced this during a court hearing in a Manhattan federal court. The charges relate to allegations of fraud, conspiracy, and market manipulation concerning Celsius Network’s operations and its proprietary token, Cel.

This decision follows a legal battle that started earlier in 2023 when Mashinsky was initially charged with seven counts related to the collapse of Celsius.

Celsius Founder Alex Mashinsky Faces Guilty Plea for Fraud and Market Manipulation

In a recent development, Celsius Network founder Alex Mashinsky intends to plead guilty to two counts of fraud after being indicted in 2023. These charges stem from accusations that Mashinsky misled Celsius customers, prompting them to invest in the company’s crypto services under pretenses. Prosecutors claim that Mashinsky artificially inflated the value of the company’s proprietary token, Cel, to mislead investors and customers.

Moreover, Celsius founder is also accused of personally profiting from his actions. Federal prosecutors allege that he reaped approximately $42 million in proceeds from the sale of Cel tokens, further exacerbating the damage caused to investors.

Earlier this year, Celsius former chief revenue officer, Roni Cohen-Pavon, pleaded guilty to similar charges and agreed to cooperate with prosecutors’ ongoing investigation.

More so, in September 2024, Mashinsky sought the testimony of six former employees to support his defense in his ongoing fraud trial. Mashinsky blamed his team for misleading investors and misrepresenting the company’s financial condition.

Celsius Network’s Bankruptcy and the Fall

The criminal charges against Celsius founder come after the collapse of Celsius Network in 2022. The company filed for Chapter 11 bankruptcy protection in July 2022, following a rush of withdrawals by customers fearing insolvency. As a result, many customers were unable to access their funds. The bankruptcy was one of the first major events in a series of failures within the crypto lending sector during the 2022 market crash.

Similarly, this period also saw the collapse of other entities like FTX and Three Arrows Capital. However, in recent reports, after almost two years, the FTX reorganization plan is set to resume in January 2025. The plan will allow creditors to begin receiving payments, though users must create accounts with designated agents to be eligible.

The Celsius Network bankruptcy revealed financial mismanagement and fraud within the company, with customers accusing Mashinsky of misleading them. This financial instability ultimately led to the downfall and the legal charges against its former CEO.

Mashinsky’s legal team is continuing to navigate the fraud charges in preparation for his upcoming court appearances. Although he initially pleaded not guilty to the charges, Mashinsky has now agreed to plead guilty.

However, despite the Celsius founder guilty plea, at press time, CEL price remained relatively stable. The token, which has faced volatility since the collapse, has rallied by 17% over the past 24 hours. This recent uptick comes after a period of sharp declines, with CEL price dropping over 96% from its all-time high.