Alex Mashinsky, the CEO of Celsius, is the latest onetime digital-currency CEO who’s now facing federal criminal charges.
, but on Thursday he joined them in what is becoming a very fast-growing club: onetime crypto kingpins who have been arrested and charged with billions of dollars’ worth of fraud.
Mashinsky is the co-founder and CEO of Celsius Networks, a lending platform that, according to the company’s own marketing materials, worked just like a bank. In fact, its model would be familiar to anyone who had a Chase account: Deposit some crypto there, and in return, the depositor would get a high-yield payment so that Celsius would lend it out to other investors. Mashinsky’s company would offer yields as high as 17 percent.
Amazingly, Mashinsky and Cohen-Pavon documented their alleged market-manipulation plans on WhatsApp. In January 2022, Mashinsky asked his CFO whether they needed to keep the value of the CEL token above $5. That day, the token dropped about ten cents to around $4.22, and Cohen-Pavon remarked that just keeping it from falling more was “not simple.” A few months earlier, the two of them outright discussed how the value of the token was illusory.
This was apparently well known in the company. According to the SEC: “One employee called Celsius a ‘sinking ship,’ while another wrote that ‘there is no hope … there is no plan’ and that Celsius’s business model ‘is fundamentally broken.’ On May 21, 2022, a Celsius executive candidly acknowledged in an internal message: ‘We don’t have any profitable services.’”
Mashinsky, who is an Israel-born serial entrepreneur, had started Celsius in 2017 as a way to challenge Wall Street banks, which he derided as slow, boring, “TradFi” dinosaurs in an age of financial innovation. Just days before Celsius collapsed, he wason Twitter for saying that Celsius customers were having trouble withdrawing.
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