Mashinsky repeatedly lied to investors about whether the platform was making uncollateralized loans.

Dec 3, 2024, 9:19 p.m. UTC

Alex Mashinsky, the founder and one-time CEO of bankrupt crypto lending platform Celsius Network, pleaded guilty to two counts of fraud on Tuesday afternoon, according to reports from Reuters and Inner City Press.

He has reportedly agreed to a maximum sentencing guideline of 360 months, or 30 years, in prison.

Last July, Mashinsky was arrested in New York and charged with seven criminal counts tied to the operation of and the 2022 collapse of his company, including securities fraud, commodities fraud, wire fraud and conspiracy to manipulate the price of Celsius’ native token, CEL.

“I said that Celsius had approval from regulators. It was false. I falsely said I was not selling my CEL tokens, I accept full responsibility for my actions,” Inner City Press quoted Mashinsky as saying in court. “I did not know which law it was violating, but I knew it was wrong…and illegal.”

Mashinsky originally pleaded not guilty and attempted to have two of the charges — the commodities manipulation charge and a market manipulation charge — dismissed. However, the judge overseeing Mashinsky’s case, U.S. District Court Judge John G. Koeltl of the Southern District of New York (SDNY) ruled that his attorney’s arguments against the charges were “without merit” meaning that, if he went to trial, Mashinsky would have to face the full seven-count indictment.

Celsius halted withdrawals in June 2022, a month after the collapse of Do Kwon’s Terra/LUNA, citing “extreme market conditions.” The following month, it filed for Chapter 11 bankruptcy protection in New York, one of the first in a slew of bankruptcies of similarly-situated crypto platforms including Voyager Digital, BlockFi, Genesis and FTX.

Read More: The Fall of Celsius Network: A Timeline of The Crypto Lender’s Descent into Insolvency

Though the collapse of Terra/LUNA and crypto hedge fund Three Arrows Capital put a squeeze on many crypto companies in the latter half of 2022, Celsius had itself — and its management — to blame for its financial woes.

For years before Celsius' collapse, Mashinsky was telling customers on his regular livestreams not to “listen to the FUD-ers” about the company’s lending practices, assuring them that “Celsius does not do non-collateralized loans…Celsius will not do that because that would be taking too much risk on your behalf.” However, the company was, in fact, making uncollateralized loans. When it filed for bankruptcy, lawyers for the crypto lending platform admitted Celsius had a $1.2 billion hole in its balance sheet.

Flashback to 2020: What Crypto Lender Celsius Isn’t Telling Its Depositors

Mashinsky is set to be sentenced in Manhattan on April 8, 2025 at 11:30 a.m. ET.