By Jonathan Stempel
NEW YORK (Reuters) – Alex Mashinsky, the founder and former chief govt of chapter cryptocurrency lender Celsius Community, was sentenced on Thursday to 12 years in jail after pleading responsible in December to securities fraud and commodities fraud.
Mashinsky’s sentence was imposed by U.S. District Decide John Koeltl in Manhattan, and is among the many longest in a prison case arising from the 2022 meltdown in cryptocurrency markets.
Sam Bankman-Fried, who led the FTX trade, is serving a 25-year jail sentence after being convicted of fraud. He’s interesting.
Federal prosecutors mentioned Mashinsky, 59, misled clients about Celsius’ security, and artificially inflated the worth of Celsius’ proprietary token Cel.
They sought a jail time period of not less than 20 years, calling it “simply punishment” for Mashinsky’s having victimized hundreds of individuals and induced billions of {dollars} in losses, whereas drawing greater than $48 million of private advantages.
“The case for tokenization and the usage of digital property is robust however it isn’t a license to deceive,” U.S. Lawyer Jay Clayton in Manhattan mentioned in an announcement.
Mashinsky sought one 12 months and someday in jail, saying he felt regret and needed to do proper by his household and former Celsius clients. His sentence contains three years of supervised launch and a $48.4 million forfeiture.
Attorneys for Mashinsky weren’t instantly out there to remark.
Based in 2017, Hoboken, New Jersey-based Celsius filed for Chapter 11 chapter in July 2022 after clients rushed to withdraw deposits as cryptocurrency costs fell.
Born in Ukraine, Mashinsky emigrated together with his household to Israel, and moved to New York after visiting town in 1988.
Cryptocurrency lenders have promised simple mortgage entry and excessive rates of interest to depositors whereas lending tokens to institutional buyers, hoping to revenue from the distinction.
Celsius provided 17% curiosity on some deposits, however had a $1.19 billion stability sheet deficit when it sought chapter safety.
Mashinsky has additionally confronted civil lawsuits by the U.S. Securities and Alternate Fee, U.S. Commodity Futures Buying and selling Fee, U.S. Federal Commerce Fee and New York Lawyer Normal Letitia James.
(Reporting by Jonathan Stempel in New York; Modifying by Daniel Wallis)
