The crypto world was rocked once again this week as Alexander Mashinsky, the former CEO and founder of Celsius Network, faces a potential 20-year prison sentence for orchestrating a large-scale financial fraud that left thousands of investors devastated. Mashinsky, who played a prominent role in the early growth of decentralized finance (DeFi), is now at the center of one of the most high-profile criminal cases in the digital asset space.

Federal prosecutors allege that Mashinsky misled the public for years while running Celsius, a platform he founded in 2018. The company was marketed as a safe and profitable alternative to traditional banking, promising attractive interest rates on stored cryptocurrencies. Investors, many of whom were ordinary people with limited financial knowledge, entrusted the platform with their digital assets—believing them to be secure.

Court records, however, tell a much darker story. Prosecutors say Mashinsky repeatedly lied about how customer funds were used, engaging in risky trading strategies without disclosing the danger. In addition to misrepresenting Celsius’s financial stability, he was also accused of using customer money to artificially inflate the value of the platform’s native token, CEL. Investigators found that Mashinsky secretly sold tens of millions of dollars’ worth of his own CEL holdings while the price was being manipulated behind the scenes.

When Celsius ultimately filed for bankruptcy in 2022, users were left unable to access their funds. The collapse wiped out hundreds of millions of dollars in customer assets, with total losses estimated to exceed $550 million. Many affected investors were individuals who had believed in Mashinsky’s public promises of safety and transparency.

Mashinsky pleaded guilty in December 2024 to two criminal charges: fraudulently promoting Celsius as a low-risk platform and manipulating the CEL token for personal gain. He admitted to personally profiting over $48 million through the schemes. Despite the plea, prosecutors claim that he continues to deflect responsibility and has taken steps to shield his assets by transferring wealth to family-controlled trusts.

Federal prosecutors have requested a minimum 20-year prison sentence, emphasizing the need to hold Mashinsky accountable and to set a clear precedent for the cryptocurrency industry. They argue that such a sentence would serve both as punishment and deterrent, warning other industry leaders against abusing the trust of their users.

While Mashinsky’s legal troubles mount, the CEL token has experienced a surprising price rally. Following the news of the sentencing recommendation, CEL surged by more than 70%, reaching a trading price of $0.15. The token saw extreme volatility, ranging from a daily low of $0.08667 to a high of $0.1782. Despite this recent spike, CEL remains more than 98% below its all-time high of $8.02, which it reached in June 2021.

Analysts are uncertain about the reasons behind the sudden price jump, though some speculate that short-term traders are capitalizing on volatility, while others believe rumors of potential restructuring or acquisition may be fueling speculative interest. Still, the long-term outlook for CEL remains murky as the fallout from the Celsius scandal continues to unfold.

A final sentencing decision for Mashinsky will be determined by a federal judge in New York in the coming months.