Alex Mashinsky founded Celsius Network in 2017 with Daniel Leon and Nuke Goldstein, pitching it as a populist alternative to legacy banks: deposit Bitcoin or Ethereum and earn interest. A March 2018 coin offering raised $50 million through the company’s CEL token, investors valued Celsius at $3 billion by late 2021, and by May 2022 it held almost $12 billion in assets for 1.7 million users. Yields reached as high as 17 percent, funded by lending customer crypto to hedge funds, pledging the same collateral repeatedly through rehypothecation, and buying its own CEL token to prop up its balance sheet.

Custodian Prime Trust walked away in June 2021 over the reuse of collateral, and regulators in New Jersey, Texas and Kentucky called the accounts unregistered securities. Blockchain analysis later showed Mashinsky sold about $44 million of CEL while saying founders were not selling. After Terra Luna collapsed in May 2022, taking Celsius funds parked in the Anchor Protocol with it, Mashinsky denied withdrawal problems on a June 10 livestream; on June 13 Celsius froze all withdrawals. It filed for Chapter 11 in July 2022 with a $1.2 billion hole, and a judge ruled depositors had transferred ownership of their coins under the terms of use, leaving them as unsecured creditors.

• On June 7, 2022, Celsius published a blog post titled “Damn the Torpedoes, Full Speed Ahead” dismissing insolvency rumors.
• The freeze helped push the total value of all cryptocurrencies below $1 trillion for the first time in over a year.
• At bankruptcy Celsius owed about $4.7 billion to its users, and the FTC later issued a $4.7 billion judgment and banned it from handling consumer assets.
• Mashinsky resigned as CEO in September 2022 and pleaded guilty to two counts of fraud in December 2024, agreeing to forfeit $48 million.
• In May 2025 a federal judge sentenced him to 12 years in prison.