From "Bank of the Future" to 12 years in prison: how Alex Mashinsky defrauded millions of depositors (Celsius Network)

Celsius Network promised clients that their crypto assets would be safer than in a bank, and paid interest on deposits that no traditional financial institution could offer. At its peak in the autumn of 2021, the platform managed around $25 billion in assets, becoming one of the largest crypto lenders in the world. On 12 June 2022, everything collapsed: the platform froze withdrawals, $4.7 billion in client assets were caught in the freeze, and it later emerged that founder Alex Mashinsky had personally withdrawn $8 million for himself and had spent years manipulating the price of his own CEL token.

Celsius built client trust on the image of a "bank of the future for crypto" — Mashinsky personally hosted weekly public question-and-answer sessions, convincing his audience of the platform's reliability and the stability of its high yield rates. This public openness created an impression of transparency, when in reality it concealed the company's true state of affairs.

Behind the scenes, Celsius placed client funds in risky strategies — lending, DeFi protocols, and speculative positions — without disclosing the real level of risk to clients. In parallel, management ran a program of artificial support for the CEL token for years: hundreds of millions of dollars were spent buying it back on the open market to artificially inflate its price, and some of these funds — according to the investigation — were taken from client deposits, which the clients were not informed about.

When the crypto market began to plummet in the spring of 2022 (in particular against the backdrop of the Terra/LUNA collapse), Celsius found itself trapped by its own risky bets. On 12 June 2022, the platform froze all withdrawals, citing "extreme market conditions"; $4.7 billion in assets were caught in the freeze. A few weeks later, the company filed for bankruptcy.

The investigation established that Mashinsky had personally withdrawn about $8 million shortly before the freeze, while continuing to publicly assure clients of the platform's reliability. In December 2024, he pleaded guilty to commodities and securities fraud, and in May 2025 the court sentenced him to 12 years in prison, a $50,000 fine, and forfeiture of $48.4 million.

Published 15 June 2025