Celsius Network was a crypto lending and interest account platform founded in 2017 by Alex Mashinsky (CEO) — Ukrainian-American entrepreneur and inventor of VoIP patents — in Hoboken, New Jersey. Celsius marketed itself as the “bank in your crypto pocket,” offering 18%+ APY on crypto deposits at peak, funded by lending assets to institutional borrowers and DeFi protocols. At its height in 2021, Celsius managed over $25 billion in customer assets and had 1.7 million customers. In June 2022, Celsius halted all withdrawals, swaps, and transfers, and filed for Chapter 11 bankruptcy on July 13, 2022. Alex Mashinsky was arrested in July 2023 and pleaded guilty in December 2024 to fraud and market manipulation charges.
Background
Mashinsky built Celsius on a populist narrative: “banks are ripping you off, we pay you what’s ours,” referencing his CEL token model where borrowers paying in CEL received better rates. The platform grew explosively in 2020–2021 as DeFi yields hit highs and the Celsius app offered simpler access than DeFi for retail users seeking yield on Bitcoin and dollar-pegged assets.
The Collapse
| Date | Event |
|---|---|
| May 2022 | Terra/LUNA collapse; Celsius is exposed via Anchor Protocol yield |
| May–June 2022 | stETH depeg means Celsius’s large stETH position (acquired via staking deposits) cannot be redeemed 1:1 for ETH |
| June 12, 2022 | Celsius announces withdrawal halt; “Due to extreme market conditions…we are pausing all withdrawals, swaps, and transfers” |
| July 13, 2022 | Celsius files Chapter 11 bankruptcy |
| July 2023 | Alex Mashinsky arrested; charged with fraud, market manipulation, and Reg A violations |
| December 2024 | Mashinsky pleads guilty to two counts; sentenced in 2025 |
CEL Token Manipulation
Court evidence showed Celsius employees and Mashinsky directed purchases of CEL token to artificially support its price while Mashinsky’s own team sold CEL into the market — a classic pump-and-dump scheme executed while customers believed the company was healthy.
stETH Vulnerability
Celsius held massive amounts of staked ETH (stETH) — locked until the Ethereum Merge enabled withdrawals — while promising customers that their ETH was withdrawable. When stETH traded at a discount to ETH in June 2022, Celsius’s liquidity proved insufficient, as the underlying assets could not be quickly liquidated.
Customer Recovery
Celsius customers received cryptocurrency distributions from the bankruptcy estate, with total recoveries estimated in the 60–80% range for many customers — better than initial fears, partly due to Bitcoin price recovery during proceedings.
Related Terms
Sources
- Celsius Bankruptcy Docket — Chapter 11 proceedings.
- DOJ v. Mashinsky — criminal case.