Alex Mashinsky **Fights** “Death Sentence” Request in Celsius Case

The legal saga surrounding the collapse of crypto lending giant Celsius continues to heat up. At the center of the storm is founder and former CEO, Alex Mashinsky, who is now fiercely pushing back against the U.S. Department of Justice’s (DOJ) request for a hefty 20-year prison sentence. Mashinsky didn’t mince words, reportedly calling the demand a “death-in-prison sentence.” This dramatic development comes as his sentencing hearing approaches.

The Intense Battle Over DOJ Sentencing

The core of the current conflict lies in the vast difference between the government’s requested punishment and what Mashinsky’s legal team believes is fair. The DOJ filed its sentencing request on May 8, pushing for a minimum of 20 years behind bars for the 59-year-old. Their argument centers on Mashinsky’s role in misleading Celsius users and profiting from his actions. If the 20-year sentence were fully served, Mashinsky would be 79 upon release.

However, Mashinsky’s lawyers presented a starkly different perspective in a May 5 reply memorandum filed in a New York district court. They argued their client should receive no more than 366 days in prison. Their defense highlights several key points:

• Mashinsky is a nonviolent, first-time offender.
• He has a previously unblemished 30-year history in business.
• He pleaded guilty and has accepted responsibility.

His legal team criticized the government’s filing, stating it “recasts this case as one involving a predator with an intent to target victims, harm them, and steal their money,” arguing this characterization ignores their client’s background.

Facing Crypto Fraud Charges After Celsius Collapse

Alex Mashinsky’s current predicament stems from charges filed against him following the dramatic collapse of Celsius in 2022. While initially facing seven charges, he reached a plea agreement in December 2024. As part of this agreement, Mashinsky pleaded guilty to two specific charges: commodities fraud and manipulating the price of Celsius’s native token, CEL.

His lawyers contend that the DOJ’s aggressive pursuit of a 20-year sentence is fueled by Mashinsky’s unwillingness to fully “capitulate to the government’s exaggerated characterizations of his actions,” specifically the claim that he was a “fraud from the get-go.” They argue that their client is being made a “scapegoat” for a wide range of corporate decisions, market fluctuations, and even employee speculation, rather than being solely responsible for every issue that led to Celsius’s downfall.

The Allegations of CEL Manipulation and Personal Profit

A significant point of contention in the case is the accusation that Mashinsky actively manipulated the price of the CEL token. Prosecutors allege that he profited substantially from this manipulation, reportedly earning $48 million by selling his CEL holdings before Celsius ultimately collapsed in June 2022.

The DOJ’s April 28 sentencing request emphasized that Mashinsky’s guilty plea confirms his crimes were not mistakes but “deliberate, calculated decisions to lie, deceive and steal.” This perspective is heavily supported by the hundreds of victim statements filed with the court on April 23. These statements painted a grim picture of the human cost of Celsius’s collapse, detailing how many individuals lost their life savings, having trusted Mashinsky’s repeated assurances that their funds were safe on the platform.

The Fallout: Celsius Collapse and Victim Repayments

Celsius filed for Chapter 11 bankruptcy protection on July 13, 2022, just weeks after halting customer withdrawals due to volatile market conditions. At the time, the platform owed approximately $4.7 billion to its creditors. The bankruptcy process has been lengthy and complex, but progress has been made.

In November 2023, a U.S. bankruptcy court approved Celsius’s restructuring plan aimed at repaying customers. By August 2024, the platform had reportedly paid out $2.53 billion to 251,000 creditors, a significant step towards resolving the financial fallout for those impacted by the collapse.

Notably, former Celsius chief revenue officer Roni Cohen-Pavon also pleaded guilty in September 2023 to similar charges. His sentencing, initially scheduled for December 11, has been postponed and will occur after Mashinsky receives his sentence, suggesting the outcome of Mashinsky’s case may influence Cohen-Pavon’s.

What Happens Next?

The sentencing hearing for Alex Mashinsky on May 8 is a critical moment. The judge will weigh the arguments from both the DOJ and Mashinsky’s defense team, taking into account the severity of the crimes, the impact on victims, Mashinsky’s personal history, and his acceptance of responsibility through the plea deal. The stark contrast between the government’s call for decades in prison and the defense’s argument for a little over a year highlights the high stakes involved in this high-profile crypto fraud case. The outcome will undoubtedly send a significant message to the broader cryptocurrency industry regarding accountability for executive actions.