Alex Mashinsky, one of the co-founders of the cryptocurrency lending platform Celsius, has been sentenced to 12 years in federal prison following the company’s collapse, which left a financial gap of over a billion dollars. The sentencing occurred after a court hearing where both victims and Mashinsky spoke.

The charges against Mashinsky included multiple accounts of fraud, as detailed by the Department of Justice (DOJ) back in July 2023. Initially denying the allegations, he later pleaded guilty to two counts pertaining to commodities and securities fraud. In accepting the plea deal, Mashinsky admitted to deceiving Celsius customers regarding the company’s operations and the investment of their funds, alongside manipulating the value of a proprietary cryptocurrency for personal gain. Additionally, he has been ordered to forfeit $48 million.

US Attorney Damian Williams remarked, “Alexander Mashinsky orchestrated one of the biggest frauds in the crypto industry. Today’s convictions underscore our dedication to holding fraudsters accountable.”

Celsius, established in 2017 as a cryptocurrency lending service, at one point claimed to manage over $25 billion in customer assets. Users were promised lucrative returns on deposits and secured cash loans against their crypto assets, with Mashinsky often criticizing traditional banks as unreliable. His presentations frequently included t-shirts displaying slogans like “Banks Are Not Your Friends.”

As the cryptocurrency market waned, particularly after the collapse of the Terra stablecoin and related tokens, Celsius declared bankruptcy in July 2022, revealing a $1.2 billion deficit in its finances, prompting investigations by the DOJ as well as state regulators. Such investigations highlighted the severe impact on retail investors, including those who risked significant portions of their savings.

The court’s decision was influenced by a preliminary defense that sought a minimal sentence based on Mashinsky’s military service, his earlier guilty pleas, and the broader challenges faced by the cryptocurrency market. Prosecutors, however, pointed out a lack of remorse shown by Mashinsky despite his guilty plea and aimed for a longer sentence of 20 years.

Ultimately, the judge ruled on a 12-year sentence, indicating a significant portion of that time must be served. Mashinsky, now 59 years old, will likely serve at least 85% of that period unless granted early release for good behavior.