US federal prosecutors have submitted more than 200 victim impact statements to a Manhattan federal court in the criminal case against Alex Mashinsky, the founder and former CEO of Celsius Network. The statements, spanning over 400 pages, chronicle the financial and emotional toll suffered by customers who entrusted their funds to the beleaguered crypto lender.
Mashinsky, accused of falsifying Celsius reserves before it fell, is scheduled to be sentenced on May 8. In a letter dated April 23, newly appointed interim US Attorney for the Southern District of New York, Jay Clayton, informed the court that his office had collected the statements to show the extent of the damage Celsius’s collapse caused.
Victims claim trusting Mashinsky was disastrous
Before its collapse, Celsius allowed users to deposit crypto and earn high yields while also offering loans backed by crypto collateral. The platform attracted hundreds of thousands of retail investors globally, many of whom were lured by Mashinsky’s messages about financial empowerment and decentralization.
However, in June 2022, when the crypto market had a prolonged bearish period, Celsius froze withdrawals because of “extreme market conditions.” By July, the company filed for bankruptcy, leaving billions in user assets trapped.
The victim letters sent to the court, written to Wendy Olsen, Victim/Witness Coordinator in the US Attorney’s Office. They talked about how Celsius caused stress in families, a lot of debt, and the loss of retirement plans. Many of the statements say that Mashinsky lied to investors about Celsius’s financial health, even though the company was almost bankrupt.
Brian wrote that he had three accounts with Celsius and lost more than $7 million, which is how much crypto is worth now.
“To add insult to injury, I am also being sued by Celsius because I took out some of my money about 70 days before Celsius went under. I am still defending myself in this lawsuit now, wasting more money and time,” he claimed.
Several victims said they felt betrayed by Mashinsky’s repeated public assurances that the company was solvent. One Celsius user recounted that even on the day of the shutdown, company representatives, including a designated concierge, insisted customer funds were safe and operations would resume shortly.
“Mashinsky created a culture of lying,” they wrote. “It appears insiders like Stephen Wundke were able to withdraw their funds while misleading us to stay calm.”
Another victim talked about how they were drawn to Celsius by Mashinsky’s pitch of passive income and financial security.
“The bankruptcy of Celsius shattered those assurances. This money would have been life-changing for me today had I never gotten involved,” the victim remarked.
The tone of many statements was of people who felt deeply wronged and angry at Mashinsky, asking for the US Department of Justice to sentence the Celsius founder accordingly. One statement called Mashinsky a “narcissist” who showed “no compassion” and mentioned reports of suicides linked to Celsius-related losses.
“The emotional and financial impact caused will be felt for years to come,” the individual said, urging the court to impose the full 30-year sentence.
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