New York Attorney General Letitia James has secured up to $35 million from Alex Mashinsky, the co-founder and former CEO of Celsius, and permanently barred him from the securities, commodities, and cryptocurrency industries, her office announced Friday. The settlement closes the state’s 2023 civil case, which accused Mashinsky of misleading hundreds of thousands of investors, including more than 26,000 New Yorkers, about the safety of deposits at the failed crypto lender.
Mashinsky is already serving a 12-year federal prison sentence after pleading guilty to securities and commodities fraud, and he was separately ordered to forfeit more than $48 million to the federal government.
The Terms of the Settlement
Under the deal, Mashinsky must pay New York $25 million if he does not forfeit $10 million in ill-gotten gains to the federal government, on top of assets already surrendered under his federal plea agreement. He faces a further $10 million payment if he does not serve his full prison sentence, which is overseen by the Bureau of Prisons. The lifetime ban blocks him from ever working again in the securities, commodities, or cryptocurrency industries.
The attorney general sued Mashinsky in 2023, alleging he repeatedly called Celsius safer than a bank while the company used customer assets in high-risk strategies and concealed the resulting losses. The SEC brought its own action against Celsius and Mashinsky in July 2023 over the platform’s collapse.
A Broader Crackdown on Crypto Founders
The New York ban extends a series of penalties against Celsius leadership. Celsius founders and executives were forced to pay $16.5 million to settle Federal Trade Commission charges, and more than $3.4 billion has been returned to creditors through the bankruptcy process as of August. The case also fits a wider enforcement push against crypto figures convicted of or accused of fraud, following sentences such as the 78-month term handed to Adam Iza, known as the crypto godfather, earlier this year.
What Happens Next
The $35 million figure is a ceiling, not a guaranteed payment. The $25 million obligation only takes effect if Mashinsky does not forfeit the $10 million to federal authorities, and the extra $10 million applies only if he leaves prison early. Celsius froze customer withdrawals in June 2022 and filed for bankruptcy a month later, leaving many depositors in financial ruin. “I will not allow scammers to use cryptocurrencies to prey on unsuspecting New Yorkers,” James said, adding that the ban keeps Mashinsky from taking advantage of investors again.
