Summary
- Alex Mashinsky, the founder of Celsius, has been permanently barred from trading in CFTC-regulated markets.
- He has been sentenced to 12 years in prison after admitting guilt to charges of securities and commodities fraud.
- This year, the FTC also imposed a lifetime ban on him from participating in the cryptocurrency industry.
The Commodity Futures Trading Commission (CFTC) has finalized its enforcement action against Alex Mashinsky, the founder of Celsius, imposing a permanent ban on his ability to trade in markets overseen by the CFTC.
This consent order not only establishes a lifelong prohibition on Mashinsky's registration with the CFTC but also signifies the conclusion of the regulator's inaugural case involving a digital asset lending platform, as noted in its 2023 press release.
Mashinsky, who served as the CEO of Celsius, was sentenced to 12 years in prison after he pled guilty to various charges of securities and commodities fraud linked to the collapse of his lending operation, which halted withdrawals and deprived customers of access to billions in deposits.
Following these events, Celsius filed for bankruptcy in an effort to recover its operations. However, these efforts failed, leading to losses exceeding $5 billion for customers.
In addition to facing criminal charges, Mashinsky was subject to civil lawsuits from the SEC and FTC, alongside the CFTC, with some claims asserting that he misappropriated approximately $42 million from clients.
This year, the Federal Trade Commission reached a settlement with Mashinsky that reduced an initial judgment of $4.7 billion to $10 million, a judgment that could be revoked if he is found to have not fully disclosed his assets. This settlement also permanently prohibits Mashinsky from working in the cryptocurrency space again.
In May, slightly more than a year post-sentencing, Mashinsky submitted a handwritten petition to overturn his 12-year prison term, claiming ineffective legal representation and a conflict of interest due to his attorney's association with Sam Bankman-Fried, the co-founder and former CEO of FTX, often referred to as SBF.
Mashinsky alleges that SBF was responsible for manipulating the Celsius token (CEL), which resulted in detrimental effects for his company and its customers. Bankman-Fried is currently serving a 25-year prison sentence for fraud convictions tied to the collapse of FTX, and just last week lost an appeal to overturn his sentence and conviction.