Former Celsius CEO Alex Mashinsky has agreed to a lifetime ban from the cryptocurrency, securities, and commodities industries under a New York settlement carrying up to $35 million in conditional payments. Summary The New York agreement ties $35 million in potential payments to forfeiture and prison conditions. Mashinsky must forfeit another $10 million federally or pay New York $25 million. The former Celsius chief is serving a 12-year sentence after pleading guilty to fraud. Celsius creditors received more than $3.4 billion through bankruptcy distributions by August 2026. New York Attorney General Letitia James announced the agreement on Oct. 9, resolving her office’s 2023 civil lawsuit over Mashinsky’s promotion of Celsius as a safe place to deposit cryptocurrency. The office said the case involved hundreds of thousands of investors, including more than 26,000 New Yorkers. Alex Mashinsky’s payment conditions depend on forfeiture and prison time Under the agreement described by the attorney general’s office, Mashinsky owes New York $25 million if he fails to surrender an additional $10 million in ill-gotten gains to the federal government. The required forfeiture is separate from assets he has already surrendered in his criminal case. A second condition requires a $10 million payment to New York if Mashinsky does not serve his full prison sentence, according to the announcement. The office said the criminal court mandates that sentence, with the Bureau of Prisons overseeing its execution. In the parallel federal prosecution, Mashinsky received a 12-year prison term and an order to forfeit more than $48 million, the attorney general’s office said. His December 2024 guilty plea covered securities fraud and commodities fraud. “Alex Mashinsky promised New Yorkers that his company was a secure place to invest their hard-earned savings, only to leave them penniless when his risky investments collapsed,” James said in the announcement. The state’s case also addressed registration failures. According to the attorney general’s office, Mashinsky did not register as a salesperson for Celsius or as a securities and commodities dealer, violating New York law. Celsius’s bank-safety claims concealed investment risks In its investigation, the attorney general’s office found that Mashinsky misled investors about Celsius’s investment strategies, user numbers and safety. The office said he repeatedly presented the platform as safer than a bank, although Celsius did not operate under the same strict federal and state requirements as banks. Promoting Celsius through interviews, public appearances and social media, Mashinsky claimed the company made low-risk investments and lent only to credible borrowers, according to the state’s announcement. Investigators said customer assets instead financed risky strategies, while he concealed losses running into hundreds of millions of dollars. The attorney general’s office described a New York investor who mortgaged two properties to put money into Celsius. Another investor, a disabled veteran, lost $36,000 accumulated over almost a decade, according to the announcement. Federal regulators also challenged how Celsius generated its advertised returns. As crypto.news reported on June 19, the Commodity Futures Trading Commission’s case against Celsius alleged that the lender pooled customer cryptocurrency to fund investments and weekly interest payments. According to the CFTC allegations detailed in that report, Celsius increasingly relied on unsecured loans and risky decentralized finance transactions while reassuring customers about their assets. The regulator said the business received about $20 billion during the period covered by its case. Celsius stopped customer withdrawals in June 2022 and filed for bankruptcy the following month, according to the Federal Trade Commission. By August 2026, the attorney general’s office said bankruptcy proceedings had distributed more than $3.4 billion to creditors. Federal settlements restrict asset services and regulated trading In April, Mashinsky accepted a separate FTC agreement that permanently restricted his promotion and provision of asset-related services, according to the agency’s order, covered in an April 29 report on his asset management ban. The FTC order entered by U.S. District Judge Denise Cote covers services allowing customers to deposit, exchange, invest, or withdraw assets. According to the order, the agreement imposed a $4.72 billion judgment, with most of that amount suspended under payment and financial disclosure conditions. The order requires a $10 million payment, which can be satisfied through a qualifying payment to the Department of Justice under the criminal forfeiture arrangement. It also allows the FTC to seek reinstatement of the suspended judgment if a court finds that Mashinsky misstated asset values, concealed holdings, or omitted material financial information. By June, a federal consent order had also permanently barred Mashinsky from trading in CFTC-regulated markets and registering with the agency, according to the June 19 report. Other Celsius co-founders reached FTC settlements as well. In July, the agency announced that Shlomi Daniel Leon and Hanoch “Nuke” Goldstein would pay $6.5 million combined, bringing the three co-founders’ required payments to $16.5 million. According to the FTC, Leon’s payment is $4.1 million, and Goldstein’s is $2.4 million. Their agreements also restrict future asset-related businesses and prohibit false statements about products and services. The agency alleged that Celsius falsely promised customers unrestricted access to deposits, sufficient reserves and a $750 million insurance policy protecting their funds. In its July announcement, the FTC said executives continued assuring customers that deposits were safe shortly before the bankruptcy filing. Court orders set deadlines in Mashinsky’s remaining proceedings In the SEC’s civil case, U.S. District Judge Paul Engelmayer signed a Sep. 29 order dismissing the action without prejudice after the parties reported a settlement in principle. The order gives the parties 90 days to seek reopening if the settlement is not completed. For the court to retain authority to enforce the agreement, Engelmayer directed them to submit it within the same period and make it part of the public record. Separately, Mashinsky has represented himself in proceedings seeking to vacate his federal conviction and sentence since May. Federal prosecutors opposed his petition in August, describing his arguments as “without merit.” A Sep. 29 ruling by U.S. District Judge John Koeltl denied discovery requests without prejudice, including three groups of requests denied as moot. An Oct. 5 order left that decision unchanged, and Koeltl set Dec. 11 as Mashinsky’s deadline to respond to the government’s opposition, allowing a further extension if needed.
