Alexander Mashinsky, the former CEO of crypto lending firm Celsius, was sentenced to 12 years in prison on Thursday after pleading guilty to two counts of fraud. Celsius Mashinsky Faces Justice The proceedings took place before US District Judge John G. Koeltl in Manhattan’s Southern District, where Mashinsky faced the repercussions of what prosecutors characterized as a sweeping scheme to defraud investors. In December, the crypto lender’s former CEO admitted guilt to charges of commodities fraud and manipulation of the Celsius token, CEL, leading to his current sentence. Related Reading: Bitcoin Soars Toward $100,000 As Treasury, Not Fed, Drives Liquidity: Expert Mashinsky’s legal troubles began in 2023 when he was arrested on multiple counts, including securities, commodities, and wire fraud. This arrest coincided with Celsius’s announcement of a $4.7 billion settlement with the Federal Trade Commission (FTC), one of the largest settlements in the agency’s history. The resolution of this settlement remains dependent on Celsius successfully returning the remaining customer assets amidst ongoing bankruptcy proceedings, emphasizing the scale of the fraudulent activities. SEC And CFTC Pursue Multi-Billion Dollar Fraud Prosecutors alleged that Mashinsky misled investors regarding the safety and profitability of Celsius’s yield-generating platform while simultaneously liquidating tens of millions of dollars in personal holdings. Initially, Mashinsky denied any wrongdoing, but his guilty plea and subsequent sentencing have brought this lengthy legal saga to a close. Related Reading: VWAPs Don’t Lie—XRP Faces Judgment Day At Monthly Support This case is part of a broader crackdown in the cryptocurrency sector, with the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) also filing charges against Mashinsky and Celsius for orchestrating a multi-billion dollar fraud scheme. The scrutiny of Mashinsky and his actions mirrors the fates of other high-profile crypto executives, including FTX founder Sam Bankman-Fried and Binance’s Changpeng Zhao, as well as Do Kwon of Terraform Labs, all of whom faced serious legal challenges in the country. Featured image from DALL-E, chart from TradingView.com
Alexander Mashinsky, the former CEO of the now-bankrupt cryptocurrency lender Celsius, has pleaded guilty to two counts of fraud, facing a potential maximum sentence of 30 years in prison. This development comes in the wake of multiple charges filed by the US Department of Justice (DOJ), which originally accused him of seven counts related to […]
Once a prominent player in the cryptocurrency lending space, Celsius Network has commenced its second round of distributions to creditors, amounting to $127 million. This follows the company’s prior efforts to distribute approximately $3 billion in crypto and fiat currency, initiated after a successful vote on its reorganization plan earlier this year. The latest distribution is aimed at eligible creditors affected by Celsius’ collapse and subsequent Chapter 11 bankruptcy filing, which temporarily halted withdrawals before the reorganization efforts. Celsius Implements Changes To Second Distribution According to court documents, the funds for this distribution were converted from cash received from Litigation Administrators into Bitcoin (BTC) for eligible creditors with approved claims. This conversion was done to streamline the distribution process and minimize administrative burdens. Related Reading: Analyst Maps Out Dogecoin Price Arc To $3 Using A Logarithmic Scale Each eligible creditor will receive a cumulative distribution representing around 60.4% of their claims’ value as of the petition date. The BTC allocated for this distribution is based on a weighted average price of $95,836.23, reflecting the price at which Celsius purchased the cryptocurrency for this purpose. The distribution process is designed to ensure that creditors receive their allocated amounts in either cash or liquid cryptocurrency. If a creditor was scheduled to receive a distribution via US-based crypto exchange Coinbase but did not receive it by the designated date, the firm will continue to hold the liquid crypto for that creditor and convert it to cash when appropriate. Bankruptcy Challenges Notably, the documents reveal that some creditors received initial distributions based on varying recovery rates—57.87% for some and 57.65% for others. To rectify this discrepancy, those who received a higher initial distribution will see a corresponding reduction in their second distribution. Eligible creditors are encouraged to ensure their distribution information is up-to-date, especially if they need to change their distribution agent. If a creditor experiences issues receiving their funds, they can create a Customer Care Ticket to seek assistance. Related Reading: Storm Ahead? Bitcoin Price Could Tumble 20% Due To M2 Supply Concerns In addition to this distribution, Celsius asserts it will navigate the complexities of its bankruptcy proceedings, which include ongoing litigation that may affect certain creditors’ eligibility for distributions. At the time of writing, the company’s native token, CEL, is trading at $0.23, recording a slight increase of 1% in the 24-hour time frame. Interestingly, CEL is one of the few cryptocurrencies on the market that has not recorded a significant uptrend over the past three weeks. Year-to-date, the token is still down 2%, but when compared to its current trading level and its record high, it is even more concerning, with a 97% gap to its all-time high of $8 reached in June 2021 before the company’s collapse. Featured image from DALL-E, chart from TradingView.com
Celsius token skyrockets 300% a month after paying $2.5 billion to creditors, marking a strong rebound in the aftermath of its bankruptcy settlement.
Over 121,000 Celsius creditors have yet to claim their funds, according to the Celsius bankruptcy administrator.