Alex Mashinsky, the founder and former CEO of defunct cryptocurrency lending company Celsius Network, said he plans to enter a guilty plea for two counts of fraud.
In a Tuesday hearing before U.S District Judge John Koeltl, Mashinsky agreed to the plea deal on charges of commodities fraud and manipulating the price of Celsius’ own token, CEL.
The plea comes after Mashinsky was indicted in July 2023 for seven counts of fraud, conspiracy, and market manipulation. The prosecutors accused him of defrauding investors and manipulating the value of CEL. At first, Mashinsky pled not guilty, but when the trial date was set for January 2024, he took the plea agreement.
Celsius’ bankruptcy and crypto sector fallout
Celsius was launched in 2017 and initially offered higher yields to crypto owners and bought tokens from institutional investors. However, the company filed for Chapter 11 bankruptcy in July 2022 after many customers withdrew their money in response to a crash in the price of cryptocurrencies. The company’s activities resumed in January 2023 after coming out of bankruptcy and ventured into Bitcoin mining.
Celsius was not immune to the general collapse of the cryptocurrency market in 2022. The rising interest rates and high inflation rate pushed the digital asset price down and put major companies like Three Arrows Capital, Voyager Digital, and FTX out of business.
The federal prosecutors also accused Mashinsky and Celsius’ former Chief Revenue Officer Roni Cohen-Pavon of manipulating the price of CEL. Cohen-Pavon had pleaded guilty in September 2023 and agreed to participate in the investigations. The prosecutors claim that Mashinsky personally gained $42m from the sale of the CEL tokens.
New SEC leadership could shape the future of crypto
Since the crash in 2022, the cryptocurrency market has made a comeback. This has been boosted by the win of President-elect Donald Trump, who is expected to support crypto-friendly policies.
As reported by Cryptopolitan, Trump reportedly offered the post of the SEC chair to Paul Atkins who is a known crypto supporter. The current SEC Chair, Gary Gensler is set to resign on January 20th, 2025, which is the same day Trump will be inaugurated.
Mashinsky along with many others has been charged for fraud in the recent past following the market collapse. FTX founder Sam Bankman-Fried was convicted in November 2023 for the wire fraud of $8 billion from customers and was sentenced to 25 years in jail.
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