Following the dramatic collapse of the Celsius crypto lending platform in 2022, hundreds of affected investors are now petitioning a federal judge for the maximum possible sentence, including life imprisonment, for former CEO Alex Mashinsky.
Mashinsky, who co-founded the company, has already pleaded guilty to multiple fraud charges connected to the firm’s demise. Ahead of his sentencing scheduled for May 8, prosecutors presented over 200 statements detailing the devastating financial and personal impact on victims, according to Bloomberg reports.
Most victims expressed a desire for the strictest penalty allowed. One investor, Brandon Lawrence, conveyed the deep sense of betrayal and financial ruin, stating his dreams tied to cryptocurrency were shattered, leaving him heavily indebted due to Mashinsky’s actions and the subsequent bankruptcy.
However, not all victims seek life imprisonment. Stephen Levenberg, a retired teacher who reportedly lost his retirement savings amounting to nearly $400,000 in Celsius, indicated he could accept a three-year sentence, contingent on Mashinsky returning the misappropriated funds.
Mashinsky’s defense team is advocating for leniency, requesting a sentence of one year or less. In contrast, probation officers have suggested a 15-year term. Prosecutors are yet to submit their final sentencing recommendation.
The downfall of Celsius began in June 2022 when the platform abruptly halted customer withdrawals, citing market volatility. A month later, the company filed for bankruptcy protection, revealing it held only a fraction of the assets needed to cover its obligations.
Reports emerged suggesting that Mashinsky and his wife withdrew approximately $12 million in various crypto tokens shortly before the platform froze user accounts and initiated bankruptcy proceedings. This case highlights the significant risks within the centralized crypto lending sector and the severe consequences for investors when such platforms fail.
Launched in 2018, Celsius experienced rapid growth, reportedly managing around $10 billion in digital assets for customers by 2021 before its eventual implosion.