Celsius Network: $4.7 Billion Frozen, Trust Shattered

Late on Sunday 12 June 2022, Celsius Network told its customers it was pausing all withdrawals, swaps and transfers "due to extreme market conditions". About 1.7 million people found that the crypto they had deposited could not be moved. A month later, on 13 July, Celsius filed for bankruptcy in New York. Its filing showed roughly $4.3 billion in assets against $5.5 billion in liabilities. Of that, about $4.7 billion was owed to the customers whose money was now frozen.

Only a year earlier Celsius had been one of the biggest names in crypto, managing about $25 billion at its peak. Its founder, Alex Mashinsky, ran weekly live video sessions in which he told customers their money was safe. His slogan was "Unbank yourself".

A bank that said it was safer than a bank

Celsius was a crypto lender, the nearest thing the industry had to a bank. Customers deposited coins such as bitcoin and ether and received weekly interest, paid in crypto. The rates were the attraction. According to the Federal Trade Commission, the US consumer regulator, Celsius advertised yields of up to 18% a year at a time when ordinary bank savings accounts paid close to nothing. It told customers it was safer than a bank, that profits came at no risk to them, that it held enough reserves to repay everyone and that it carried a $750 million insurance policy on deposits. The FTC said none of that was true.

To pay those rates, Celsius had to earn more than 18% itself. It lent customers' coins to trading firms, put them into decentralised finance protocols (automated lending and trading systems run by code rather than by companies) and made other bets that worked only while prices rose. A court-appointed examiner, Shoba Pillay, reported in January 2023 that the business Celsius actually ran was very different from the one it advertised.

Then there was CEL, the company's own token. Celsius paid higher rates to customers who took their interest in CEL, and bought CEL in the market to support its price. Think of a company paying staff bonuses in its own shares, then using customer deposits to buy those shares and keep the price up. Prosecutors said Mashinsky led that effort while quietly selling his own CEL.

The run and the freeze

The 2022 crypto crash broke the model. In May the TerraUSD stablecoin collapsed and took about $40 billion of value with it, and customers began pulling money out of every crypto lender. Celsius kept telling them to stay. Mashinsky himself withdrew about $10 million in May 2022, according to the Financial Times and court filings; a spokesperson said the withdrawal was pre-planned and mostly went on taxes. Weeks later the doors were shut.

What followed was one of the longest bankruptcies in crypto. Customers learned that, legally, the coins in their interest accounts belonged to Celsius, and that they were unsecured creditors standing in line.

Arrest, plea and prison

On 13 July 2023, a year to the day after the bankruptcy filing, Mashinsky was arrested in New York and charged with securities, commodities and wire fraud and with manipulating the price of CEL. The Securities and Exchange Commission, the Commodity Futures Trading Commission and the FTC sued him the same day. Celsius itself agreed to a $4.7 billion FTC judgment that was suspended so as not to compete with customers' claims.

Roni Cohen-Pavon, Celsius's former chief revenue officer, pleaded guilty in September 2023 and agreed to cooperate. On 3 December 2024, weeks before his trial, Mashinsky pleaded guilty to one count of commodities fraud and one count of securities fraud. On 8 May 2025 Judge John Koeltl sentenced him to 12 years in prison, against the 20 years prosecutors had asked for, and ordered him to forfeit $48,393,446. His lawyers had asked for a year and a day and argued that anything longer would be a "death-in-prison" sentence. Cohen-Pavon was sentenced to time served on 13 May 2026.

Mashinsky has not stopped fighting. In May 2026, representing himself, he filed a motion to vacate his sentence, arguing that his former lawyers had a conflict of interest. Prosecutors called the claims baseless. In July 2026 the FTC announced that he and co-founders Shlomi Daniel Leon and Hanoch Goldstein would pay $16.5 million, $10 million of it from Mashinsky, and accept bans from the industry. On 9 October 2026 New York Attorney General Letitia James announced a settlement that permanently bars him from the securities, commodities and crypto industries in New York, with up to $35 million payable if he fails to meet his federal forfeiture or does not serve his full sentence.

What customers got back

Celsius left bankruptcy on 31 January 2024 under a plan approved by Judge Martin Glenn and backed by about 98% of account holders. Creditors received bitcoin, ether and cash, plus shares in Ionic Digital, a new bitcoin mining company formed from Celsius's mining arm. By August 2024 the plan administrator had paid out more than $2.53 billion, about 93% of the value then available, to some 251,000 of 372,000 eligible creditors. Many of the rest were owed less than $100 and had not completed the identity checks needed to collect.

The estate went after others. Celsius sued Tether, the issuer of the largest stablecoin, claiming it had wrongly sold about 39,500 bitcoin Celsius had posted as collateral in 2022. In October 2025 Tether agreed to pay $299.5 million to settle, a fraction of what the bitcoin was then worth. Most of that money went into a fourth distribution of $344.4 million announced in January 2026.

Payouts were valued at crypto prices from January 2024, not at the prices customers paid or the prices when their money was frozen. Customers who held CEL were paid about 25 cents per token.