According to a legal settlement facilitated by New York State Attorney General Letitia James ( Letitia James ) on October 9, 2026, the former CEO of Celsius, Alex Mashinsky, will be permanently barred from entering the New York state financial industry and may be subject to conditional payment obligations of up to $35 million. This agreement represents an additional state-level penalty in addition to his federal fraud conviction and 12-year prison sentence.
Key Points
- Mashinsky has been permanently excluded from the securities, commodities, and cryptocurrency industries in New York State.
- The payment obligations in the settlement agreement depend on the federal confiscation arrangements and whether they have completed their prison sentences.
- As of August, the distribution amount under the bankruptcy proceedings of Celsius has exceeded $3.4 billion.
According to CoinDesk, this agreement resolves a civil case filed by the state of New York against Mashinsky. In 2023, Zhan Lexia sued him, accusing him of making false guarantees regarding the safety of deposits held in Celsius to hundreds of thousands of investors, including over 26,000 residents of New York State.
Conditional payment under the previous legal settlement of Celsius CEO
According to the Office of the Attorney General, if Mashinsky does not hand over $10 million in illegal earnings to the federal government, he will have to pay $25 million to the state of New York. If he fails to complete his sentence, an additional $10 million will be due.
In addition to these financial conditions, the agreement also permanently prohibits him from working in the securities, commodities, and cryptocurrency industries in New York State. This permanent industry ban is part of the state-level settlement and is independent of his federal criminal penalties.
Fraud allegations and federal penalties
After pleading guilty to charges related to securities and commodity fraud, Mashinsky is currently serving a 12-year federal prison sentence. The Commodity Futures Trading Commission (CFTC) of the United States also permanently banned him from engaging in commodity-related activities in June.
The charges in New York State focus on how he described the security of this lending platform. Zhan Lexia stated that he misled investors regarding the security of deposits at Celsius, including more than 26,000 residents of New York State.
Celsius Recovers over $3.4 billion in bankruptcy claims
Zhan Lexia stated that as of August, customers and creditors had received over $3.4 billion through the Celsius bankruptcy process. The lending platform ceased customer withdrawals in June 2022 and applied for bankruptcy protection in July 2022.
When Celsius emerged from bankruptcy proceedings in 2024, its distribution plan amounted to approximately $3 billion, including cryptocurrencies and cash. This plan utilized Coinbase and PayPal for the payments.
Zhan Lexia questions the claim of Celsius regarding "security"
Zhan Lexia stated that Mashinsky describes Celsius as being safer than banks, but at the same time, this lending platform is using customers' assets to engage in high-risk operations and concealing losses. She claimed that these statements are part of what has led to investors being misled.
"I will not allow scammers to use cryptocurrencies to deceive unsuspecting New Yorkers," said Jen Le Xia.
This article was generated with the assistance of artificial intelligence and has been reviewed by an editorial team.
