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Celsius Founder Alex Mashinsky Sentenced to 12 Years in Prison for Crypto Fraud

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Alex Mashinsky, the founder and former CEO of defunct crypto lender Celsius Network, was sentenced Thursday to 12 years in prison after pleading guilty to securities and commodities fraud in a case that stands among the most severe stemming from the 2022 cryptocurrency market collapse.

U.S. District Judge John Koeltl in Manhattan imposed the sentence, which also includes three years of supervised release and a $48.4 million forfeiture. The ruling comes after federal prosecutors accused Mashinsky, 59, of deceiving Celsius customers about the platform’s safety and artificially inflating the value of the CEL token, Celsius’ proprietary digital asset.

The prosecution sought at least 20 years of imprisonment, describing Mashinsky’s actions as a betrayal that caused billions in customer losses while he personally gained over $48 million.

“The case for tokenization and the use of digital assets is strong, but it is not a license to deceive,” said U.S. Attorney Jay Clayton in a post-sentencing statement.

Mashinsky had asked for a sentence of just one year and one day, expressing remorse and a desire to make amends. His attorneys did not immediately provide comment following the sentencing.

Founded in 2017, Celsius was based in Hoboken, New Jersey, and promised high-yield returns, offering up to 17% interest on some crypto deposits. Like other lenders in the crypto space, Celsius attracted customers with the promise of easy lending and high returns while funneling deposits to institutional borrowers in hopes of profiting from the spread.

However, the model collapsed under the weight of falling crypto prices. In July 2022, Celsius filed for Chapter 11 bankruptcy with a $1.19 billion balance sheet deficit, after a customer run on deposits.

Mashinsky’s sentencing follows the high-profile conviction of FTX founder Sam Bankman-Fried, who is serving 25 years for fraud and is currently appealing. Mashinsky also faces ongoing civil lawsuits from the SEC, CFTC, FTC, and New York Attorney General Letitia James.

Born in Ukraine, Mashinsky immigrated to Israel and later moved to New York City in 1988, where he became a prominent tech entrepreneur before his fall from grace in the crypto world.

Google Faces Class Action Over Alleged Mobile Phone Privacy Violations

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Google has been cleared to face a privacy class action lawsuit after a federal judge ruled that the company must answer claims it collected personal data from users’ mobile phones despite their attempt to disable tracking features. This ruling opens the door to a potential trial in August.

The class action, which targets both Android and non-Android users, accuses Google of violating California’s law against unauthorized computer access by collecting personal browsing histories without users’ consent. Users argue that despite disabling the “Web & App Activity” setting meant to prevent tracking, Google continued to capture and store their data.

Chief Judge Richard Seeborg of the U.S. District Court for the Northern District of California rejected Google’s arguments that it had adequately disclosed its data collection practices and that users consented to the tracking. In his 20-page ruling, Seeborg pointed to internal Google communications indicating that employees were aware that users might find the company’s data practices “alarming.” Google’s ambiguous disclosures about data collection, both within and outside Google accounts, were seen as a potential violation of users’ privacy.

In response to the ruling, Google denied the allegations, asserting that its privacy controls have been transparent and are being misrepresented. The company plans to continue defending its practices in court, calling the claims “patently false.” The plaintiffs’ lawyers, however, have yet to provide a comment.

The trial is currently scheduled for August 18, and this lawsuit follows a similar case involving Google’s Chrome browser, where the company agreed to destroy billions of data records after being accused of tracking users in “Incognito” mode. The legal teams behind both cases have valued the earlier settlement at over $5 billion.