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Mashinsky was indicted in 2023 on seven criminal counts

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Charges include fraud, conspiracy and market manipulation

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Celsius filed for Chapter 11 bankruptcy protection in 2022

(Changes headline)

By Luc Cohen

NEW YORK, Dec 3 (Reuters) -

Alex Mashinsky, the founder and former CEO of cryptocurrency

lender Celsius Network, said on Tuesday he intends to plead

guilty to two counts of fraud.

Mashinsky, 59, was indicted on July 13, 2023, on seven

counts of fraud, conspiracy and market manipulation charges.

Federal prosecutors in Manhattan said he misled customers of

Celsius to persuade them to invest, and artificially inflated

the value of his company's proprietary crypto token. He pleaded

not guilty later that day.

U.S. District Judge John Koeltl in November denied a motion

by Mashinsky to dismiss two criminal counts ahead of his trial,

which had been slated for Jan. 28.

On Tuesday, during a hearing before Koeltl, Mashinsky said

he agreed to plead guilty to two out of the seven counts he was

initially charged with: commodities fraud, and a fraudulent

scheme to manipulate the price of CEL, Celsius' in-house token.

Mashinsky was one of several crypto moguls to be charged

with fraud after a slump in crypto prices in 2022 caused a

number of companies, including now-bankrupt exchange FTX, to

collapse.

Prices for digital assets like Bitcoin have since surged, in

part due to optimism about U.S. President-elect Donald Trump's

expected policies friendly toward cryptocurrency.

Founded in 2017, Celsius filed for Chapter 11 bankruptcy

protection in July 2022 after customers rushed to withdraw

deposits as crypto prices fell. Many were initially unable to

access their funds. The company exited bankruptcy on Jan. 31,

and has pivoted to Bitcoin mining.

Crypto lenders such as Celsius grew rapidly as crypto prices

surged during the COVID pandemic. They promised easy loan access

and eye-popping interest rates to depositors, then lent out

tokens to institutional investors, hoping to profit from the

difference.

Celsius was among the first in a series of bankruptcies in

the cryptocurrency sector in 2022 as token prices cratered amid

rising interest rates and stubbornly high inflation. It filed

for bankruptcy shortly after Singapore-based crypto hedge fund

Three Arrows Capital and rival crypto lender Voyager Digital did

so.

Federal prosecutors in Manhattan accused Mashinsky and

Celsius' former chief revenue officer, Roni Cohen-Pavon, with

manipulating the market for the company's crypto token, known as

Cel. Cohen-Pavon pleaded guilty in September 2023 and agreed to

cooperate with prosecutors' investigation.

Prosecutors have said Mashinsky also personally reaped

approximately $42 million in proceeds from selling his holdings

of the Cel token.

FTX's founder Sam Bankman-Fried was convicted of stealing

roughly $8 billion from the exchange's customers in November

2023 and sentenced in March to 25 years in prison.