Former Celsius Network CEO Alex Mashinsky has agreed to a permanent ban from the cryptocurrency, securities and commodities industries as part of a settlement resolving a civil fraud lawsuit brought by New York Attorney General Letitia James. The agreement also establishes up to $35 million in conditional payments tied to additional forfeitures and compliance with his prison sentence.
Announced Friday, the settlement concludes New York’s 2023 lawsuit, which accused Mashinsky of misleading hundreds of thousands of investors about the risks associated with Celsius before the cryptocurrency lending platform collapsed in 2022.
Under the terms, Mashinsky must pay $25 million to New York if he fails to forfeit an additional $10 million in illicit gains to the federal government beyond assets already surrendered. He would face another $10 million payment if he does not complete his full prison sentence.
Mashinsky is currently serving a 12-year federal sentence after pleading guilty in December 2024 to securities and commodities fraud. He was also ordered to forfeit more than $48 million in connection with the criminal proceedings.
New York Attorney General Letitia James said Mashinsky had presented Celsius as a secure place for customers to deposit their savings, while investors ultimately suffered losses when the company’s investments failed.
Celsius collapse left investors facing billions in losses
The state’s original lawsuit alleged that Mashinsky marketed Celsius as a safer alternative to traditional banks while offering yields of up to 17% on cryptocurrency deposits. Prosecutors alleged that he misrepresented the company’s financial condition and concealed risks associated with its investment activities.
Celsius had accumulated approximately $20 billion in digital assets by early 2022. However, the company struggled to generate sufficient revenue to sustain its promised returns, with the Commodity Futures Trading Commission pointing to increasingly risky investment practices.
The crisis escalated in June 2022, when Celsius suspended customer withdrawals. The company filed for bankruptcy the following month, reporting a gap of more than $1 billion between its assets and liabilities.
Recovery efforts have since returned substantial funds to affected customers. According to the New York Attorney General’s Office, more than $3.4 billion had been distributed to Celsius creditors through bankruptcy proceedings as of August 2026.
Federal regulators have imposed additional restrictions
The New York settlement adds to a series of enforcement actions against Mashinsky by US regulators.
In June, the CFTC permanently barred him from trading and registering with the agency. An earlier agreement with the Federal Trade Commission also prohibited him from participating in the cryptocurrency and financial industries and required a $10 million payment, alongside a largely suspended $4.72 billion judgment.
The Securities and Exchange Commission is pursuing a separate resolution. In September, the agency reached an agreement in principle with Mashinsky to settle its civil lawsuit. A federal judge dismissed that case without prejudice on Sept. 29 while the settlement was being finalized.
Mashinsky continues to challenge his criminal conviction
Despite the growing number of regulatory restrictions and settlements, Mashinsky is still attempting to overturn his federal conviction and prison sentence.
Representing himself, he has been seeking to vacate the judgment since May. Federal prosecutors opposed his request in August, arguing that his claims lacked merit.
A judge subsequently rejected his request for discovery, and an Oct. 5 order left that decision in place. Mashinsky has until Dec. 11 to respond to the government’s opposition to his petition.
The latest agreement marks another significant development in the legal fallout from Celsius’s collapse, while Mashinsky’s separate effort to overturn his criminal conviction remains unresolved.
