Former Celsius Nework CEO Alex Mashinsky received a 12-year prison sentence on Thursday for misappropriating Celsius customers’ funds and manipulating the price of the lender's token, CEL.

Mashinsky, 58, pled guilty to one count of committing commodities fraud and one count of committing securities fraud last December. He was initially indicted on seven charges, including two counts of wire fraud and a fraudulent scheme to manipulate the price of CEL.

Prior to Mashinsky's sentencing, federal prosecutors recommended the former CEO serve 20 years in prison, while the defense requested a sentence of a year and one day for its client.

Some creditors of the defunct lender had called for Mashinsky to receive the harshest possible punishment for his crimes. The charges carried a maximum prison sentence of 30 years.

In a letter to Judge Koeltl dated May 5, Mashinsky’s lawyers said a longer sentence would amount to a “death-in-prison” punishment. They argued that the U.S. government's rationale for its sentencing recommendations served to “demonize [Mashinsky's] intentions and motivations, his character and personality, and attribute his wrongdoing to a sadistic disposition.”

“He was not motivated by malevolence, cruelty, greed or ego,” the lawyers said of Mashinsky in the filing. “And his guilty plea most certainly is not an agreement to abandon good faith, zealous advocacy or to present mitigation evidence at sentencing.”

Celsius declared bankruptcy in July 2022, a few weeks after freezing withdrawals on its platform, citing “extreme market conditions.” The trading platform experienced a bank-run-style cascade of withdrawals that it couldn't honor a month earlier, shortly after the crash of algorithmic stablecoins LUNA and UST caused the cryptocurrency market to crater.

Celsius customers lost more than $5 billion in the company's implosion. Efforts to pay back creditors are ongoing.

Edited by James Rubin

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