Former Celsius CEO Gets 12 Years for Fraud; US Seeks Two Years for SEC Hacker Over Bitcoin ETF Chaos

Alexander Mashinsky, the former CEO of cryptocurrency lending platform Celsius, has been sentenced to 12 years in prison for fraud. The sentencing follows the collapse of Celsius, which had frozen customer assets after engaging in high-risk investments and unsecured loans with over $4 billion of client funds. Celsius had previously stolen $426 million in cryptocurrencies, similar to the case of the Japanese exchange platform Coincheck. The platform offered clients the opportunity to invest in cryptocurrencies in exchange for interest and to purchase Celsius's own digital currency, the CEL token. At its peak in late 2021, Celsius boasted over one million clients and managed assets worth more than $25 billion. Following the collapse of the cryptocurrency luna in spring 2022, Celsius froze customer assets, leading to a bankruptcy filing a month later. By March of the following year, approximately 93% of the frozen funds had been recovered and redistributed to former clients.

In a separate case, US prosecutors are seeking a two-year prison sentence for Eric Council Jr., who pleaded guilty to hacking the SEC's X account in January 2024. Council posted a false announcement about the approval of a Bitcoin ETF, causing market chaos just hours before the real approval was announced. This incident occurred amidst a broader crisis in the cryptocurrency sector, highlighted by the collapse of FTX, the second-largest global exchange platform at the time of its bankruptcy in November 2022. The sector has since been revitalized by favorable judicial decisions and the policies of President Donald Trump, who is keen on promoting digital currencies.