Roni Cohen-Pavon, former chief revenue officer for collapsed cryptocurrency lender Celsius Network, received a sentence of time served on April 22, 2024. This followed his September 2023 guilty plea in Manhattan federal court for wire fraud, conspiracy to commit wire fraud, and conspiracy to manipulate the price of Celsius's CEL token. He had faced up to 20 years in prison for the most serious charges.
Cohen-Pavon's cooperation with federal prosecutors was a significant factor in the lenient sentencing by U.S. District Judge John G. Koeltl. He provided assistance in the ongoing case against Celsius founder and former CEO Alex Mashinsky, who faces similar charges. Mashinsky, arrested in July 2023, has pleaded not guilty and awaits trial.
Prosecutors detailed how Cohen-Pavon and Mashinsky allegedly conspired to artificially inflate the price of Celsius's proprietary CEL token. They manipulated the token's value by using customer deposits to buy CEL on open markets, creating false demand and misleading investors about the company's financial health. This scheme, according to court documents, allowed the two executives to enrich themselves at the expense of Celsius users.
Celsius operated a crypto lending platform that promised retail investors high annual percentage yields on their cryptocurrency deposits. The company froze customer withdrawals in June 2022, citing "extreme market conditions," and filed for Chapter 11 bankruptcy a month later in the U.S. Bankruptcy Court for the Southern District of New York. The bankruptcy proceedings revealed a deficit of $4.7 billion and impacted over 600,000 creditors globally.
Cohen-Pavon was arrested in Israel in July 2023 and subsequently extradited to the United States. He remained in custody until his plea agreement. His "time served" sentence means he will not face additional incarceration beyond the period he already spent detained awaiting trial and sentencing.
The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) also filed civil lawsuits against Mashinsky and Celsius, alleging securities fraud and unregistered offerings. These regulatory actions are proceeding alongside the criminal case. The collapse of Celsius stands as one of the most prominent failures in the cryptocurrency sector, alongside FTX and Terra/Luna.
Celsius creditors voted overwhelmingly in favor of a reorganization plan in September 2023, which the bankruptcy court confirmed in November 2023. The plan aims to return a portion of assets to account holders, primarily in Bitcoin and Ethereum, and includes the formation of a new company named "NewCo" to manage remaining illiquid assets.