Alex Mashinsky is detained while the US coordinates actions against Celsius

On July 13, 2023, the U.S. Attorney’s Office for the Southern District of New York unsealed an indictment against Alex Mashinsky, founder and former CEO of Celsius, and Roni Cohen-Pavon. Mashinsky was arrested for Celsius related charges, its performance product and the trading of the CEL token. In parallel, the SEC, the CFTC and the Federal Trade Commission (FTC) acted.

Criminal charges were allegations that had to be proven beyond a reasonable doubt. Civil lawsuits used different standards and remedies. That four authorities announced measures on the same day did not turn each statement into a proven fact nor did it allow their sanctions to be added indiscriminately.

What conduct did the prosecution attribute to Mashinsky?

Celsius offered rewards on deposited crypto assets, collateralized loans, and custody. According to the indictment, Mashinsky presented the platform as secure and financially sound while hiding risky trades, losses and liquidity difficulties. Clients would have held or transferred assets in reliance on those statements.

Prosecutors also alleged a strategy to artificially support CEL’s price through market purchases. Mashinsky reportedly promoted the token, publicly denied that he was selling it, and at the same time made tens of millions from his own sales. Cohen-Pavon was accused of participating in that manipulation.

The charges included securities, commodities and wire fraud, as well as conspiracy to manipulate the market. The categories could overlap because the statements covered performance products, token operations, and electronic communications. Fraud does not depend on first resolving whether all cryptoassets are securities.

SEC, CFTC and FTC Civil Actions

The SEC maintained that Celsius and Mashinsky offered unregistered crypto securities and deceived investors. The CFTC formulated its own theory about fraud and manipulation of a digital commodity. The FTC focused on consumer promises, asset grabs, and deceptive business practices.

Celsius, already in bankruptcy, reached an agreement with the FTC that included a $4.7 billion sentence suspended due to its inability to pay and the priority of the bankruptcy process. The company accepted prohibitions and cooperation. The figure did not represent 4.7 billion available to immediately distribute among clients.

The coordination showed how a platform can perform several regulated functions with a single interface. Receiving assets, promising returns, lending, custody and holding your own token generate different risks. The absence of a banking license does not allow one to present itself as safer than a bank without verifiable grounds.

Consequences for clients of lending platforms

When Celsius suspended withdrawals in June 2022, hundreds of thousands of customers had approximately $4.7 billion locked in. The contractual ownership of the assets proved decisive in the contest: depositing tokens does not always equate to keeping them segregated and available for immediate return.

The case made it essential to read conditions of use, know if the client transfers ownership and check how the performance is generated. Stable profitability can hide unsecured credit, term mismatches, or exposure to correlated counterparties. Purchases of one’s own token can aggravate the problem by turning its price into a manipulable signal of solvency.

Outlook from 2026

Mashinsky pleaded guilty on December 3, 2024, to commodities fraud and securities fraud. He acknowledged deceptions about the Celsius business and his activity with respect to CEL. With the declaration he avoided the trial and transformed part of the 2023 allegations into admitted facts for the criminal sentence.

On May 8, 2025, he was sentenced to twelve years in prison, three years of supervised release, a fine of $50,000, and confiscation of $48,393,446. The court linked the penalty to customer losses and token manipulation. As of August 2026, this outcome allows Mashinsky’s responsibility for the two admitted crimes to be firmly described, but does not automatically convert all of the parallel allegations by each agency against all of the defendants into judicial decisions.