Once recognized for his ideas in cryptocurrency, Alex Mashinsky started and led Celsius Network, a platform aimed at offering high-yield lending. His reputation will have plummeted by 2025, and he will spend 12 years in prison for engineering an $8 billion fraud scheme. Just as the crypto market often experiences highs and lows, so did Sam Bankman-Fried’s experience. Although his net worth has dropped a great deal, Mashinsky’s actions emphasize the dangers of overreaching and dishonest strategies. This post examines what he did at Celsius, the scandal that caused the company’s downfall, his resulting financial trouble, and the wider consequences for the crypto sector.
How Celsius and Mashinsky made their digital finance platform a success
When Mashinsky founded Celsius Network in 2017, he marketed it as a bank for digital currency users by telling people to “Unbank Yourself.” To earn up to 17% per year, users could put their money into the “Earn” program on the platform, with promises that their deposits would be invested in actions that produce returns. At the highest point in 2021, Celsius’ assets reached $25 billion, making it one of the biggest crypto companies worldwide. He promoted Celsius by saying it was safer than regular banks and offered people higher rates on their money. His regular public video interviews on YouTube and X led to the formation of “Celsians”—fans who view Mashinsky as a leader of financial democracy.
His firm once took in Bitcoin and Ethereum deposits, then lent the funds to large investors to make a profit, or used them in DeFi projects for returns. Celsius gained credibility because Mashinsky brought his expertise from founding companies such as VoiceSmart and GroundLink. Nevertheless, his claims about safety and returns hid the fact that the platform was financing major bets without collateral, which ultimately brought the platform down.
The recent Celsius Collapse and Fraud Scandal
The decline of Celsius began in May, precipitated by the Terra Luna crash, which left the company with a $1.19 billion shortfall on their balance. Customers started withdrawing their money when cryptocurrency prices dropped, but Celsius was unable to process withdrawals in June 2022 because of “extreme market conditions,” they said. The action left $4.7 billion in customer funds locked, which made many people angry. In July 2022, Celsius declared bankruptcy and acknowledged it had lost $1.2 billion, but prosecutors later put the estimate at $7 billion using prices for 2025.
In July 2023, Mashinsky was charged with seven counts of securities, commodities, wire fraud, and market manipulation. The prosecutors claim that Alexander altered the way customers saw Celsius’s finances and manipulated the price involved with the CEL token. Initially, Koine denied the charges, but later admitted guilt to trading in commodities and securities in December 2024. He admitted to saying the Earn program was approved by regulators and to selling CEL tokens for $48 million at high prices without revealing it. John Koeltl, a district judge in the U.S., sentenced him to 12 years in jail after he requested one year and prosecutors demanded 20 years.
It became clear from the scandal that Celsius was not operating in a way that could work long-term. With Celsius’ customer funds, Mashinsky propped up the CEL price by spending around half a billion dollars, though employees pointed out how it felt like a Ponzi scheme. Some investors told of psychological damage, with one account reporting a loss of 70% of their assets as a young student in high school. In 2023, thanks to the actions of the Federal Trade Commission, Celsius was barred from dealing with client assets, and an agreement for $4.7 billion was settled, matching the biggest penalty ever set by the FTC.
Net Worth and the Outcome
At its highest point, Mashinsky’s fortune was said to be between $100 million and $500 million thanks to selling CEL tokens and ownership in Celsius. Still, more than two-thirds of Cambis’s earnings came from CEL, though he made additional millions from other types of crypto assets. Taking into account his $48.4 million fine, the legal costs, and the suits from the SEC, CFTC, and the New York Attorney General, his net worth for 2025 is likely zero or below zero. His costly way of life, made fun of by victims on “unbankrupt yourself” merchandise, will be gone, and his assets have most likely been taken away.
When markets dropped, Mashinsky lost almost all the value in his Bitcoin, Ethereum, and CEL when markets fell apart due to his risky bets on loans to Three Arrows Capital. Even after Celsius switched to Bitcoin mining in January 2025, Mashinsky was left without a financial rescue since he is limited by the company. His scandalous actions have led to the loss of his fortune, so he now only has legal problems and nothing else.
Changes in the Crypto Industry
Mashinsky joining forces with other well-known problems like the FTX and Binance leaders has increased the lack of trust in centralized crypto platforms. The sentence Mr. Alford received in May 2022, amounting to 12 years, is one of the harshest given following the 2022 crypto crash, showing regulators will not let fraud go unpunished. The evidence for tokenization is strong, but U.S. Attorney Jay Clayton warned it does not give individuals the green light to trick people. The failure of Celsius was part of a chain reaction after Luna/Terra and ahead of FTX, revealing that crypto lending has widespread issues.
The comparison between Mashinsky and Bernie Madoff that @PeterSchiff shared on X demonstrates how many view Celsius as running a Ponzi scheme. Because of the scandal, both the SEC and CFTC are monitoring the industry by going after misleading platforms. Yet, this also inspired new developments, since Celsius moved into mining and the DeFi sector kept expanding. Mashinsky’s situation should remind investors to think twice before believing everything leaders promise and claim.
Problems and Disputes
Many of the issues surrounding Mashinsky come from his calculated deliberations to fool others. Security rules were ignored as he wrongly stated Celsius was regulated and said it was making money at a time when employees noted unreliable financial activities. complaining about the family because they seemed to show apathy, and actually started to show off their wealth following the collapse. Many of the victims were unhappy with Veon’s first not guilty plea and his claim that he was only a scapegoat, since their life savings had been lost. His expression of regret at the trial meant little to TiffanyFong_ on X and many others because by then, $4.7 billion of users’ funds were missing.
What’s Next
He will be 71 years old if he is given the full 18-year sentence. Though he was convicted, Celsius victims are still unsure if they will recover their funds. Crypto keeps changing, including tighter rules and a move towards decentralization by businesses involved. Mashinsky’s situation highlights the importance of honesty and responsibility, so people become more careful with their investments from 2025 forward.
FAQs
1. What did Alex Mashinsky do for Celsius Network?
He organized Celsius and served as CEO, introducing it as a secure platform for impressive cryptocurrency yields, only for it to fall apart in 2022.
2. Why was Mashinsky sent to prison?
For defrauding customers, manipulating Celsius’s CEL token, and taking part in securities and commodities fraud, he was given 12 years in 2025.
3. How much is Mashinsky’s fortune in 2025?
Now his net worth is probably close to zero after paying $50M in forfeited funds, legal fees, and being involved in lawsuits.
4. How much money did customers of Celsius lose?
The withdrawal freeze in 2022 led to Celsius customers losing $4.7 billion, which would amount to $7 billion using 2025 prices.
5. Why did Celsius fail?
The deficit of $1.2 billion came about because of the Terra Luna crash, some risky bets, and not enough collateral.
