Incident report
Celsius Network
Celsius sold a simple promise: deposit crypto, earn yield, stay safer than a bank. The failure exposed the core risk of centralized yield platforms: customers see a balance, but not the lending book, leverage, duration mismatch, or token incentives behind it.
Key operator
Alex Mashinsky
Founder and former CEO
Photo: Court and media public record
Damage / claims
$4.7 billion judgment in FTC settlement terms
Affected clients
Hundreds of thousands of creditors in distribution process
Collapse value
Customer assets frozen before Chapter 11 filing
Public outcome
Founder sentenced; bankruptcy distributions
What Happened
Alex Mashinsky pleaded guilty to fraud charges and was later sentenced to 12 years in prison.
Customers deposited crypto into interest accounts marketed as safe and always available.
Regulators alleged Celsius concealed deteriorating financial health while continuing to solicit deposits.
Withdrawals were frozen before bankruptcy, turning account balances into creditor claims.
Timeline
- 2017Celsius Network is founded as a crypto lending and yield platform.
- Jun 2022Celsius freezes withdrawals, swaps, and transfers.
- Jul 2022The company files for Chapter 11 bankruptcy.
- May 2025Alex Mashinsky is sentenced to 12 years in prison, according to public reports.