Celsius CEO Alex Mashinsky has been sentenced to 12 years in a multi-billion dollar cryptocurrency fraud case.

The former CEO of Celsius Network Ltd., Alexander Mashinsky, found himself in the spotlight at a court hearing held on May 8, 2025, in New York, where he was sentenced to 12 years in prison. This event marked a significant turning point for the leader of a company once considered a "bank" in the world of cryptocurrency. At the hearing in the Southern District Court of New York, presided over by Judge John G. Koeltl, Mashinsky was forced to confront the consequences of charges that prosecutors described as a large-scale fraud scheme targeting investors. In December 2023, he pleaded guilty to commodity fraud and schemes to manipulate the Celsius token. The court session took place in room 14A on Pearl Street, 500, a location where many other crypto experts who ended up behind bars had previously faced hearings.

The legal troubles of Mashinsky began to unfold in 2023 when he was arrested on charges of securities fraud, commodity asset fraud, and phone line manipulation. This occurred against the backdrop of Celsius reaching a settlement with the Federal Trade Commission for an amount of4.7 billion dollars— one of the largest agreements in the history of the FTC. This agreement is due to the fact that the company must return the remaining client assets as part of the bankruptcy process, highlighting the scale of the fraud. Prosecutors accused Mashinsky of deceiving investors about the reliability and profitability of the income-generating platform while secretly selling off his assets for tens of millions of dollars.

At first, he denied his guilt, but the admission of guilt and sentencing on Thursday mark the final stage of a years-long case, during which charges were also brought by the Securities and Exchange Commission and the Commodity Futures Trading Commission. These agencies accused Celsius and Mashinsky of orchestrating a multi-billion dollar fraud scheme. Mashinsky's downfall reflects the legal proceedings faced by other once-influential figures in the cryptocurrency industry, such as FTX founder Sam Bankman-Fried, Binance's Changpeng Zhao, and Do Kwon from Terraform Labs.

Sam Bankman-Fried and his case

Sam Bankman-Fried, co-founder of FTX, was sentenced to25 yearsprison in March 2024 for mass fraud and conspiracy that led to the collapse of his cryptocurrency exchange and the associated hedge fund Alameda Research. Once praised as a cryptocurrency genius, Bankman-Fried was exposed for misappropriating billions of dollars in client funds to support his trading firm. His girlfriend Caroline Ellison, who led Alameda Research, received a significantly lighter sentence —two yearsHer cooperation with the prosecutor's office played a crucial role in uncovering a complex fraud scheme at FTX, enabling authorities to build compelling charges against Bankman-Fried and his associates.

Right now, Bankman-Fried is trying to appeal his conviction and sentence. Ryan Salame, the former deputy of the FTX founder, was sentenced to90 monthsa prison sentence followed by three years of supervised release. FTX's chief engineer Nishad Singh also avoided prison time and receivedthree yearsconditional sentence, and Gary Wang, co-founder and CTO of FTX, also did not end up behind bars.

The situation with FTX

In May 2024, the bankruptcy management of FTX announced that almost all clients would get their money back — and even more. A judge on Wednesday dismissed most of the lawsuits against celebrities and athletes who participated in the advertising of FTX. Lawsuits were filed against stars like Tom Brady, Gisele Bündchen, Kevin O'Leary, and Stephen Curry by a group of FTX investors.

The Binance case

As for Binance, in November 2023, Changpeng Zhao, known as "CZ," reached an agreement with the U.S.

The Do Kwon case

South Korean law enforcement is also pursuing Do Kwon, co-founder and CEO of Terraform Labs, the company behind the collapsed cryptocurrencies terraUSD and luna. Prosecutors in South Korea are seeking to freeze bitcoins associated with Kwon. Months before the fraud of Bankman-Fried and FTX became known, Kwon was already considered the main villain in the crypto industry, as his unstable stablecoin nearly led to the collapse of the entire sector. In May 2022, Kwon was enjoying immense success: his company, Terraform Labs, was behind one of the most popular dollar-pegged stablecoins. Money was flowing in, his assets, including terra and luna, were valued in the tens of billions of dollars, and Kwon was included in Forbes' prestigious "30 Under 30" list.

Nevertheless, it all ended in disaster. Despite the fact that most stablecoins are backed by cash and other assets, Kwon created a complex code model. When the algorithm failed in May 2022, it resulted in losses of40 billion dollarsIn just one night, this led to catastrophic losses for many investors and caused the collapse of the hedge fund Three Arrows Capital in June of the same year, followed by the bankruptcies of crypto lenders such as Voyager Digital, BlockFi, Genesis, and others — including FTX.

The collapse of the stablecoin undermined trust in the sector and exacerbated the already ongoing decline in cryptocurrencies. In June, the court ruled that Do Kwon and his bankrupt company Terraform Labs reached a settlement with the U.S. Securities and Exchange Commission for an amount of4.5 billion dollarsKwon was extradited to the US from Montenegro to face fraud charges in January 2025.

The collapse of the crypto hedge fund Three Arrows Capital, as well as the creditors Voyager Digital and Celsius, can be traced back to the failure of Kwon's stablecoin project. When 3AC's creditors demanded the return of their assets amid the worsening situation, cash was unavailable. Many of the firm's counterparties were unable to fulfill requests from their investors, including retail deposits that were misled by promises of annual returns.20%All three companies have declared bankruptcy and are currently at various stages of debt resolution, with Celsius just emerging from bankruptcy in January. 3AC co-founder Kyle Davies stated that he does not regret the collapse of his fund and has so far managed to avoid imprisonment, unlike his co-founder Su Zhu, who is serving time in prison in Singapore.