(Bloomberg) — Alex Mashinsky, the founder of cryptocurrency lender Celsius Network, was ordered to spend 12 years in prison for defrauding hundreds of thousands of customers lured by his firm’s high interest rates on digital-asset deposits.

Mashinsky, who pleaded guilty in December, was sentenced Thursday by US District Judge John Koeltl in Manhattan. Federal prosecutors had sought a 20-year prison term for the 59-year-old former chief executive officer, calling him “unrepentant.”

Celsius’ bankruptcy was part of the 2022 “crypto winter” that wiped out billions of dollars in asset value. Under President Joe Biden, the Justice Department launched a series of prosecutions targeting crypto industry figures. Sam Bankman-Fried, whose FTX exchange collapsed four months after Celsius, is currently serving a 25-year sentence for fraud, and Terraform Labs founder Do Kwon is still awaiting trial.

But Mashinsky’s sentence comes as the Trump administration is deemphasizing crypto-related investigations as part of a friendlier stance towards the industry. The Justice Department last month issued new guidelines stating it would no longer pursue several types of criminal cases it said would be better left to regulators. The administration said it would still prosecute cases in which crypto investors were defrauded, though. 

Celsius gained popularity by pitching itself as being as safe as a bank for crypto, except with higher interest rates, and on the strength of Mashinsky’s highly charismatic YouTube and social media presentations. At its height, Celsius held around $25 billion in assets. 

But the firm was unable to meet demand for withdrawals amid the crypto downturn in June 2022 and filed for bankruptcy a month later. Prosecutors said Thursday that Celsius customers lost access to more than $5 billion in crypto, though they’ve since recovered around $3 billion. 

As part of his plea, Mashinsky admitted making a series of misleadingly rosy statements about Celsius’ financial health on his “Ask Mashinsky Anything” YouTube videos as well as engaging in manipulative trading to inflate the price of Celsius’ CEL token. Mashinsky made around $42 million from his CEL trading, the government said.

Lawyers for Mashinsky, a father of six who was born in the Ukraine and grew up in Israel before coming to the US in 1988, had asked Koeltl to impose a sentence of just over a year in prison. They depicted him as being caught off guard by the crypto downturn and said he never meant to defraud anyone. 

Fighting back tears on Thursday, Mashinsky apologized for his actions and called his false statements “inexcusable.” He said the decision to halt withdrawals had been made in haste to try to protect Celsius’ top customers from losing everything. 

“All my actions were meant to protect my community, and I failed,” he said.

His lawyers urged Koeltl not to compare Celsius to FTX and said their client had been unfairly depicted by prosecutors as “some sort of financial serial killer.”

But prosecutors said Mashinsky engaged in a “years-long campaign of lies and self-dealing that left in its wake billions in losses and thousands of victimized customers.” They cited more than 200 letters submitted to the judge by victims before sentencing, many of them urging him to impose a harsh punishment. 

“His crimes were not the product of negligence, naivete, or bad luck,” prosecutors said in a sentencing memo last month. “They were the result of deliberate, calculated decisions to lie, deceive, and steal in pursuit of personal fortune.”

The case is US v. Mashinsky, 23-cr-00347, US District Court, Southern District of New York.

(Updates with detail from sentencing hearing, background.)

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