Alex Mashinsky Reaches Settlement with New York State, Banned from Entering the Crypto Industry for Life
The former CEO, Celsius, has agreed to accept a lifetime ban from entering the cryptocurrency, securities, and commodities industries. According to the settlement agreement reached in New York State, he may also be subject to conditional payment obligations of up to $35 million.
- The New York State agreement links potential payments of up to $35 million with forfeiture arrangements and the completion of serving a sentence.
- Mashinsky is required to hand over an additional $10 million in illegal earnings to the federal government; otherwise, they will have to pay $25 million to the state of New York.
- After admitting to fraud, this former Celsius executive is serving a 12-year prison sentence.
- As of August 2026, Celsius creditors have received over $3.4 billion through bankruptcy distribution.
New York State Attorney General Letitia James announced this agreement on October 9th, bringing to a close the civil lawsuit filed by his office in 2023. The lawsuit alleged that Mashinsky promoted Celsius as a safe place to store cryptocurrencies. The Attorney General's office stated that the case involved hundreds of thousands of investors, including more than 26,000 residents of New York State.
The payment terms for Alex Mashinsky depend on the circumstances of confiscation and imprisonment.
According to the explanation of the agreement by the Office of the Attorney General, if Mashinsky fails to hand over $10 million in illegal gains to the federal government, he will owe $25 million to the State of New York. This required fine is separate from the assets he has already handed over in the criminal case.
The announcement states that the second condition is: if Mashinsky does not serve the entire term of his sentence, he must also pay $10 million to the state of New York. The Office of the Attorney General indicates that the term of imprisonment is determined by the criminal court, and its enforcement is the responsibility of the Federal Bureau of Prisons.
The Office of the Attorney General stated that in the concurrent federal criminal prosecutions, Mashinsky was sentenced to 12 years in prison and ordered to pay a fine of over $48 million. His plea of guilty in December 2024 covered securities fraud and commodity fraud charges.
James stated in the announcement: ‘Alex Mashinsky promised New Yorkers that his company was a safe place for their hard-earned savings, but after the collapse of his high-risk investments, he left them with nothing.’
The cases in that state also involve registration violations. According to the Office of the Attorney General, Mashinsky is neither registered as a salesperson for Celsius nor as a securities and commodities trader, which violates New York State law.
The claim of Celsius regarding bank-level security obscures investment risks.
In the investigation, the Office of the Attorney General found that Mashinsky misled investors regarding the investment strategy, number of users, and security of Celsius. The office stated that he repeatedly described the platform as being safer than banks, despite the fact that Celsius is not subject to the same strict federal and state-level regulatory requirements as banks.
According to a announcement from New York State, Mashinsky claimed during interviews, public appearances, and social media promotions of Celsius that the company engaged in low-risk investments and only lent money to borrowers with good reputations. Investigators stated that customer assets were actually used for high-risk strategies, and he also concealed losses amounting to hundreds of millions of dollars.
The Office of the Attorney General mentioned that an investor from New York State mortgaged two properties in order to invest funds in Celsius. According to the announcement, another investor, who is a disabled veteran, lost nearly $36,000 that he had saved over a period of ten years.
Federal regulatory agencies have also raised questions about how Celsius generates the profits it claims in its promotions. As reported by crypto.news on June 19th, the U.S. Commodity Futures Trading Commission (CFTC) alleged in a case against Celsius that this lending institution pooled customers' cryptocurrencies for investment and weekly interest payments.
According to the allegations detailed in this report (identified by CFTC), Celsius relied increasingly on unsecured loans and high-risk decentralized financial transactions while assuring customers about the safety of their assets. Regulatory authorities stated that during the period covered by its case, the business attracted approximately $20 billion in funds.
According to the United States Federal Trade Commission ( FTC ), Celsius stopped customer withdrawals in June 2022 and filed for bankruptcy the following month. The Office of the Attorney General of New York State stated that by August 2026, more than $3.4 billion had been distributed to creditors through the bankruptcy proceedings.
Federal settlement restricts asset services and regulated transactions
According to the FTC command, Mashinsky accepted another separate agreement in April, which permanently restricts its promotion and provision of asset-related services. This information was mentioned in a report on its asset management ban on April 29th.
A judge in the United States, identified as Denise Cote, issued an order numbered FTC that covers services allowing customers to deposit, exchange, invest in, or withdraw assets. According to this order, a judgment amount of $4.72 billion was established, of which the majority is subject to suspension of enforcement under conditions related to payments and financial disclosures.
This command requires a payment of 10 million US dollars, which can be fulfilled by making a payment to the United States Department of Justice that meets the specified conditions through criminal forfeiture arrangements. The command also allows FTC to apply for the reinstatement of the previously suspended judgment amount when the court determines that Mashinsky has overstated the value of assets, concealed held assets, or omitted significant financial information.
According to reports on June 19th, by June, a federal injunction had permanently prohibited Mashinsky from trading in markets regulated by CFTC, and also prohibited it from registering with that institution.
Other co-founders of Celsius have also reached a settlement with FTC. In July, FTC announced that Shlomi Daniel Leon and Hanoch would pay a total of $6.5 million, bringing the total amount that the three co-founders need to pay to $16.5 million.
According to FTC, Leon is required to pay $4.1 million, and Goldstein is required to pay $2.4 million. Their agreement also restricts them from engaging in asset-related businesses in the future and prohibits them from making false statements regarding products and services.
FTC claimed that Celsius had mistakenly promised customers that they could withdraw their deposits without restrictions and that there were sufficient reserves, and that they had an insurance policy worth $750 million to protect their funds. FTC stated in a July announcement that shortly before applying for bankruptcy, the company's executives continued to assure customers about the safety of their deposits.
The court ordered a deadline to be set for the remaining procedures of Mashinsky.
In a civil case before the U.S. Securities and Exchange Commission (SEC), U.S. District Judge Paul Engelmayer signed an order on September 29 to dismiss the case without prejudice after both parties reported that they had reached a principle-based settlement.
This command gives both parties 90 days to resolve the issue. If reconciliation is not achieved, they may apply to restart the case. To ensure that the court retains the authority to enforce the agreement, Engelmayer requires both parties to submit the agreement within the same period and to have it recorded publicly.
Additionally, since May, Mashinsky has been appearing in person on his own in the proceedings seeking to have his federal conviction and sentence overturned. In August, the federal prosecutor opposed his application, stating that his arguments were "entirely unfounded."
U.S. District Judge John Koeltl ruled on September 29th to dismiss the evidence collection requests, including three sets of requests that were dismissed as no longer having practical significance. A ruling on October 5th upheld this decision. Koeltl set December 11th as the deadline for Mashinsky to respond to the government's objections, allowing for further extensions if necessary.
