CEL Token Manipulation Unveiled: Celsius Founder Admits to Fraud in Federal Court

Large companies do not always follow the principles of honesty, and most people are well aware of this. The Web3 sector is no exception. Recently, the world learned about a scandal involving Celsius founder Alex Mashinsky. He admitted to fraud and manipulation of the CEL token. Now, he faces up to 30 years in prison.

Celsius Network LLC was founded in 2017 and is a successful cryptocurrency lending company. It operates globally, with offices in four countries and its headquarters in Hoboken, New Jersey. Celsius allows customers to deposit digital assets like Bitcoin and Ethereum to earn interest and take loans using cryptocurrency as collateral. In May 2022, the company managed $12 billion in assets and issued $8 billion in loans.

However, in June 2022, Celsius suspended all transfers and withdrawals, citing “extreme market conditions.” This move caused panic and triggered a drop in the prices of major cryptocurrencies, including Bitcoin. By July 2022, the company filed for bankruptcy, shocking its customers.

During a hearing in federal court in New York, Alex Mashinsky pleaded guilty to conspiracy to commit fraud and manipulate the price of the Celsius token (CEL). He admitted that during an interview in 2021, he lied, claiming that Celsius had received regulatory approval for its Earn investment program. Additionally, Mashinsky concealed the sale of his own CEL tokens, artificially inflating their value.

From Hero to Villain: Celsius CEO Admits to Lying About Regulatory Approval

As part of a plea deal with prosecutors, Mashinsky agreed not to contest the court’s sentence, which will be announced on April 8, 2025. He faces up to 30 years in prison. In September 2023, Celsius’ former Chief Revenue Officer, Roni Cohen-Pavon, also pleaded guilty and agreed to cooperate with the investigation.

During the hearing, Alex stated that what he did was wrong and promised to do everything he could to make it right. Prosecutors, however, argue that the Celsius founder deceived customers, convincing them to invest in the CEL token and inflating its value. This allowed him to earn $42 million from selling his assets while customers suffered significant losses.

After filing for bankruptcy, Celsius began restructuring. In January 2023, the company emerged from bankruptcy proceedings, shifting its focus to Bitcoin mining. In February of the same year, Celsius distributed $2 billion worth of cryptocurrency to 172,000 creditors to partially compensate for their losses.

As we can see, the Web3 industry is not always as safe as it may seem to many. Coinmooner encourages you always to use the most advanced protection methods to secure yourself and your investments as much as possible. Additionally, always verify the information about companies you work with.