Celsius founder Alex Mashinsky has consented to a guilty plea to fraud charges that pertain to the manipulation of the Cel token market.
Following an indictment filed in July 2023, Alex Mashinsky, the founder and former CEO of Celsius Network, consented to enter a guilty plea on two fraud charges. During a court hearing in a Manhattan federal court, his defense attorney disclosed this information. The charges pertain to accusations of market manipulation, conspiracy, and fraud in relation to Cel, the proprietary token of Celsius Network.
This decision is the result of a legal dispute that commenced in 2023 when Mashinsky was initially charged with seven counts related to the collapse of Celsius.
Alex Mashinsky, the founder of Celsius, is currently facing a guilty plea for market manipulation and fraud
Alex Mashinsky, the founder of Celsius Network, has recently announced his intention to enter a guilty plea to two counts of fraud following his indictment in 2023. These charges result from accusations that Mashinsky deceived Celsius customers, causing them to invest in the company’s crypto services under false pretenses. Mashinsky is accused by prosecutors of artificially inflating the value of the company’s proprietary token, Cel, to deceive investors and customers.
Additionally, the founder of Celsius is accused of personally benefiting from his actions. According to federal prosecutors, the damage inflicted upon investors was further exacerbated by the approximately $42 million in proceeds he received from the sale of Cel tokens.
Roni Cohen-Pavon, Celsius’s former chief revenue officer, pleaded guilty to comparable charges earlier this year and consented to assist prosecutors in their ongoing investigation.
Furthermore, in September 2024, Mashinsky pursued the testimony of six former employees to bolster his defense in his ongoing fraud trial. Mashinsky attributed the company’s financial misrepresentation and misleading investors to his team.
The Demise of Celsius Network and its Bankruptcy
The criminal charges against the founder of Celsius Network were initiated after the company failed in 2022. The company filed for Chapter 11 bankruptcy protection in July 2022 in response to a surge in withdrawals by customers concerned about insolvency. Consequently, numerous customers were unable to access their funds. The bankruptcy was one of the initial significant events in a sequence of failures within the crypto lending sector during the 2022 market crash.
In the same vein, this period also witnessed the demise of other entities, including Three Arrows Capital and FTX. Nevertheless, the FTX reorganization plan is scheduled to resume in January 2025, as indicated by recent reports, nearly two years after it was last implemented. The plan will enable creditors to commence receiving payments; however, users must establish accounts with designated agents to qualify.
The Celsius Network bankruptcy exposed financial mismanagement and fraud within the company, prompting customers to accuse Mashinsky of deceiving them. Ultimately, this financial instability resulted in the company’s downfall and the filing of legal charges against its former CEO.
Mashinsky’s legal team is currently engaged in the process of addressing the fraud charges in anticipation of his forthcoming court appearances. Despite his initial denial of the charges, Mashinsky has now consented to enter a guilty plea.
Nevertheless, the Celsius founder’s guilty plea did not significantly affect the price of CEL at the time of publication. The token has experienced a 17% increase in value over the past 24 hours despite being subject to volatility since the collapse. This recent increase follows a period of steep declines, during which the price of CEL plummeted by more than 96% from its all-time high.
