New York Permanently Bans Celsius Founder from Cryptocurrency Industry in $35 Million Fraud Settlement

Alex Mashinsky, the former CEO of the Celsius platform, has been permanently banned from engaging in the cryptocurrency, securities, and commodities industries based on a settlement with Letitia James, the Attorney General of New York, which includes conditional payments of up to $35 million.

This agreement, announced in New York on Friday, concludes a civil lawsuit from 2023 that accused Mashinsky of misleading hundreds of thousands of investors about the safety of the Celsius platform prior to its collapse in 2022.

Under the agreement, if Mashinsky fails to surrender an additional $10 million of his illicit earnings to the federal government, in addition to previously seized assets, he must pay $25 million to New York. Additionally, if he does not complete his entire prison sentence, he will owe another $10 million.

Mashinsky is currently serving a 12-year federal prison sentence for fraud and has been separately ordered to forfeit over $48 million of his assets. This federal sentence was issued following his admission in December 2024 to securities and commodities fraud.

Letitia James stated in her announcement on Friday:

Alex Mashinsky promised New Yorkers that his company would be a safe place to invest their hard-earned savings, but ultimately left them with nothing after his risky investments collapsed.

Celsius Promised High Returns Before Collapse

According to a complaint filed in 2023, Mashinsky marketed the Celsius platform as a safer alternative to banks while promising users returns of up to 17% while concealing the company’s risky investments and growing losses.

According to the Commodity Futures Trading Commission (CFTC), by early 2022, Celsius had attracted about $20 billion in digital assets but struggled to generate enough income to pay the promised returns, leading them to pursue riskier investments.

Celsius blocked withdrawals for customers in June 2022 and declared bankruptcy the following month, revealing a shortfall of over $1 billion between its assets and liabilities.

According to the New York Attorney General's office, by August 2026, over $3.4 billion will have been distributed to creditors and Celsius victims through bankruptcy proceedings.

Previous Federal Settlements and Legal Challenges

The New York agreement follows separate settlements reached earlier this year with federal regulatory agencies. In June, the CFTC permanently banned Mashinsky from trading and registering with the agency. Earlier in April, a settlement with the Federal Trade Commission (FTC) barred him from working in crypto and finance, requiring him to pay $10 million along with a suspended penalty of $4.72 billion.

The U.S. Securities and Exchange Commission (SEC) also reached a preliminary agreement with Mashinsky to settle its separate civil lawsuit in September; following this, a federal judge temporarily dismissed the case on September 29 (without prejudice) until the finalization of this agreement.

Since May, Mashinsky has been personally seeking to overturn his federal conviction and sentence without a lawyer, but federal prosecutors have opposed his request.

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