Five months after pleading guilty to a multi-billion-dollar fraud, Celsius founder Alex Masski was sentenced to 12 years in prison on Thursday for fraudulent investors. The Ukrainian-born Maskie was first arrested in 2023 after a federal investigation into the collapse of his crypto lending startup.
On Thursday, the former CEO of the bankrupt crypto lending platform was standing before District Judge John Cortre in Manhattan. Prosecutors have been hoping for at least 20 years, misleading thousands of clients and calling it “just a punishment” for pocketing more than $48 million in the process.
“Alex Massky, founder and former CEO of the bankrupt cryptocurrency lender Celsius Network, was sentenced to 12 years in prison on Thursday after pleading guilty to securities and product fraud in December,” Reuters reported.
Celsius Network founder has been in prison for 12 years to scam crypto investors
The 59-year-old Maski was found guilty of securities and merchandise fraud after mispromoting the company as a safe haven for traditional Celsius tokens, cells and crypto investors. The fallout left billions of dollars in losses, adding the machine ski name to the list of disgraced crypto executives currently behind the bar.
His ruling includes a three-year supervised release and a court order that confiscates $48.4 million. His legal team had been seeking just over a year, citing regrets and desire to get things right with his family and former clients.
“The cases of tokenization and digital asset use are strong, but they are not licenses to deceive,” US lawyer Jay Clayton said in a post-ruling statement.
The Machine Ski ruling ranks among the toughest ever since the 2022 cipher crash. FTX founder Sam Bankman-Fried has now served for 25 years in his role in another collapse and is suing the verdict.
Once based in Homie, New Jersey, Celsius was founded in 2017 and has promised a high return to crypto depositors and provided interest of up to 17% on select accounts. However, users quickly pulled out funds as the crypto market crashed in mid-2022. That July, the company filed for Chapter 11 bankruptcy, revealing a $1.19 billion hole in its balance sheet.
Born in Ukraine and raised in Israel, Machine Ski moved to New York in the late 1980s. His fall from grace is sudden and public and has been marked by multiple private lawsuits from the SEC, CFTC, FTC and New York Attorney General Letitia James.
Rise and fall in the Celsius network
The celsius Network was launched in 2017 with the promise of high returns and slogans like “Unbank Yourself” and was sold as a safe alternative to traditional banks. They claimed that they would generate high yields for users by offering programs such as “acquisition” and “custody” and leveraging cryptocurrency loans and borrowings. By 2021, celsius managed $25 billion in assets, primarily from retail investors.
But behind the scenes, Machineski and his team misrepresented the company’s financial stability and used customer funds to artificially inflate CEL prices. This created a false sense of profitability and security, making investors vulnerable to huge losses when the company collapses.
In June 2022, celsius frozen the withdrawal of 1.7 million customers and locked over $4.7 billion in crypto assets. A month later, the company filed for bankruptcy and joined other crypto startups affected by exposure to now bankrupt hedge fund Three Arrows Capital (3AC).
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