• Alex Mashinsky sentenced to 12 years in prison for fraud involving Celsius Network.
• Prosecutors sought at least 20 years, citing billions in losses caused by Mashinsky's actions.
• He misled customers about Celsius' safety and inflated the token's value.
• Mashinsky expressed remorse but received a significant sentence amidst broader crypto industry scrutiny.

Alex Mashinsky, the founder and former CEO of Celsius Network, has been sentenced to 12 years in prison after pleading guilty to securities and commodities fraud last December. His sentence, imposed by U.S. District Judge John Koeltl in Manhattan, is among the longest associated with the significant fallout from the 2022 cryptocurrency market collapse, paralleling cases like that of Sam Bankman-Fried, who received a 25-year sentence for fraud, according to Channel News Asia and Reuters.

Federal prosecutors revealed that Mashinsky, 59, dangerously misled customers about the safety of Celsius while artificially inflating the value of its proprietary token, Cel. They deemed his actions worthy of a harsher punishment, initially seeking a prison term of at least 20 years due to the extensive financial damages caused, equating to billions of dollars lost, and over $48 million in personal gains drawn from the scheme. "Digital assets have strong potential, but they are not a license to deceive," stated U.S. Attorney Jay Clayton, according to India Times and Salon.

Celsius, founded in 2017 and based in Hoboken, New Jersey, filed for Chapter 11 bankruptcy in July 2022 after a wave of customer withdrawals amid falling cryptocurrency values. Mashinsky had offered interest rates of up to 17% on deposits but revealed a staggering $1.19 billion balance sheet deficit when bankruptcy filings were made. With his company once managing about $25 billion in assets, many customers viewed Celsius akin to a traditional bank, unintentionally misled due to misleading claims regarding its regulatory approval. Mashinsky's statements, including messages like "Unbank Yourself," were designed to lure customers into investing, while he simultaneously sold his tokens at inflated prices, as reported by Channel News Asia and Reuters.

In his sentencing plea, Mashinsky expressed remorse, requesting a more lenient one year and one day in prison. His final sentence included three years of supervised release and a forfeiture of $48.4 million. In addition to his criminal charges, he faces civil litigation spearheaded by multiple regulatory bodies including the U.S. Securities and Exchange Commission and the New York Attorney General's office, highlighting the extensive scrutiny over not only Mashinsky but the broader cryptocurrency industry amidst the fallout, according to India Times and Salon.