Alex Mashinsky, the former CEO of Celsius, has agreed to surrender all rights to assets tied to the collapsed crypto lender.

According to newly filed court documents, Mashinsky and entities associated with him, including AM Ventures Holdings Inc., Koala1 LLC, and Koala3 LLC, will be excluded from any future distributions under the Celsius bankruptcy plan.

The filing stated:

“All Claims asserted by, or scheduled by the Debtors on behalf of, (1) Mr. Mashinsky, (2) AMV, (3) Koala1, and (4) Koala3 are withdrawn, disallowed, and shall receive no distribution under the Plan.”

The document also stated that the funds freed from the forfeiture should be redistributed to affected customers and creditors.

This development marks another chapter in Celsius’s ongoing bankruptcy proceedings, which began in mid-2022 following the platform’s abrupt suspension of withdrawals.

So far, Celsius has returned roughly $2.53 billion to users. Approximately 70% of creditors have received some form of repayment, but the process has been lengthy and complex.

Celsius bankruptcy

Celsius halted user withdrawals in June 2022, locking up nearly $4.7 billion in customer funds, amid the market instability driven by LUNA’s collapse in the prior month.

The company was forced to file for Chapter 11 bankruptcy in July 2022, triggering investigations into its financial practices and the conduct of its leadership.

Mashinsky was arrested in 2023 over several fraud-related charges and later pleaded guilty as part of his legal proceedings. Prosecutors claimed that he misled investors about the company’s financial health while offloading personal holdings of Celsius’s native token. They added that his actions gave users false confidence even as the platform was nearing collapse.

Last month, Mashinsky was sentenced to 12 years in prison, avoiding the 20-year term prosecutors had pursued. His defense argued that a longer sentence would amount to life imprisonment for the 59-year-old.

His downfall joins a growing list of disgraced crypto leaders, including FTX’s Sam Bankman-Fried and Terra’s Do Kwon, who were once industry icons whose collapses have reshaped public and regulatory perceptions of digital assets.

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Lawyers for former Celsius Network CEO Alex Mashinsky have asked a federal judge to postpone his sentencing by one month, citing the complexities of the case and the volume of material requiring review, according to a Feb. 5 court filing.

Mashinsky, who pleaded guilty in his fraud case, is scheduled to be sentenced on April 8, but his defense team is seeking to push that date to May 8 to allow additional time for preparation.

His attorneys argue that reviewing the extensive presentence investigation report (PSR), more than 170 victim impact statements and his legal obligations in the Celsius bankruptcy case require additional time.

According to the filing:

“The defense respectfully requests a one-month adjournment of Mr. Mashinsky’s sentencing to ensure that it has sufficient time to prepare a sentencing submission that accurately presents Mr. Mashinsky’s views on his offense conduct.”

One-week extension

Mashinsky is also responding to a 180-page complaint in an adversary proceeding related to the Celsius bankruptcy, which his attorneys claim is stretching his ability to prepare for sentencing.

The defense said that the government agreed to lift a stay on that litigation despite their request for it to remain in place until after sentencing.

The prosecution has agreed to a one-week extension for objections to the PSR and its final disclosure but opposes delaying the sentencing date on the basis that Mashinsky’s request is premature and that victims of the case deserve finality.

The case, United States v. Mashinsky, involves allegations that the former Celsius CEO misled investors and defrauded customers before the company collapsed. Mashinsky could face a significant prison term.

Judge John G. Koeltl has yet to rule on the request.

Celsius legal saga

Mashinsky was arrested in July 2023 and charged with multiple counts of securities fraud, commodities fraud, and wire fraud in connection with Celsius Network. He pleaded guilty to two of the charges and agreed to a sentencing guideline of up to 30 years in prison on Dec. 3, 2024.

Founded in 2017, Celsius marketed itself as a high-yield crypto lending platform that allowed users to earn interest on deposited digital assets, sometimes promising returns as high as 17%. At its peak, the company claimed to have billions in assets under management and millions of users.

However, the firm faced growing scrutiny after the 2022 crypto market downturn exposed liquidity issues. Celsius halted customer withdrawals in June 2022 and filed for Chapter 11 bankruptcy the following month, leaving thousands of customers unable to access their funds.

Prosecutors alleged that Mashinsky falsely portrayed Celsius as a safe and profitable alternative to traditional banks while concealing the company’s financial struggles. They accused him of misusing customer funds to prop up the company’s failing balance sheet and cashing out millions for himself before the collapse.

The US Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Federal Trade Commission also filed parallel civil charges against him.

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