Former Celsius chief executive Alex Mashinsky has agreed to a New York settlement that permanently bars him from the cryptocurrency, securities and commodities industries. The deal, announced Oct. 9 by New York Attorney General Letitia James, resolves a 2023 civil lawsuit accusing him of misleading investors about Celsius and promoting it as a safe place to deposit crypto.

The agreement can require up to $35 million in payments, depending on what happens in related federal forfeiture proceedings and whether Mashinsky serves his full prison sentence. Mashinsky is already serving a 12-year federal sentence after pleading guilty in December 2024 to securities fraud and commodities fraud.

How the New York payment terms work

Under the attorney general’s announcement, Mashinsky must pay New York $25 million if he does not surrender an additional $10 million in ill-gotten gains to the federal government. The state said this forfeiture requirement is separate from assets he has already given up in the criminal case.

The settlement also includes a second trigger tied to his incarceration. If Mashinsky does not serve his full prison sentence, he would owe another $10 million to New York. The attorney general’s office said the sentence is imposed by the criminal court and administered by the Bureau of Prisons.

In the federal criminal matter, Mashinsky was ordered to forfeit more than $48 million, according to the state announcement. James said Mashinsky had portrayed Celsius as a secure home for New Yorkers’ savings before risky investments collapsed.

What New York alleged about Celsius

The state said its case involved hundreds of thousands of investors, including more than 26,000 New Yorkers. It also alleged that Mashinsky failed to register as a Celsius salesperson and as a securities and commodities dealer, in violation of New York law.

According to the attorney general’s investigation, Mashinsky misrepresented Celsius’s investment strategy, user numbers and safety practices. The office said he repeatedly compared the platform favorably with banks even though Celsius was not subject to the same federal and state requirements.

Investigators further alleged that customer assets were used for risky strategies while losses worth hundreds of millions of dollars were concealed. The state said Mashinsky promoted Celsius through interviews, public appearances and social media while describing its investments as low-risk and its borrowers as credible.

Federal cases and other agency actions

The New York settlement comes alongside several federal actions tied to Celsius and its former leadership. In a parallel case, the Commodity Futures Trading Commission alleged that Celsius pooled customer crypto to support investments and weekly interest payments, and increasingly relied on unsecured lending 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.

Mashinsky also accepted an FTC agreement in April that permanently restricted his promotion and provision of asset-related services, including services that let customers deposit, exchange, invest or withdraw assets. That order imposed a $4.72 billion judgment, though most of it was suspended subject to payment and financial disclosure conditions.

By June, a federal consent order had also permanently barred Mashinsky from trading in CFTC-regulated markets or registering with the agency. Other Celsius co-founders later reached FTC settlements; in July, the agency said Shlomi Daniel Leon and Hanoch “Nuke” Goldstein would pay $6.5 million combined.

Bankruptcy recoveries and what comes next

Celsius froze customer withdrawals in June 2022 and filed for bankruptcy the following month. By August 2026, the attorney general’s office said the bankruptcy process had distributed more than $3.4 billion to creditors.

One remaining civil matter is the SEC’s case. A federal judge dismissed that action without prejudice after the parties reported a settlement in principle, giving them 90 days to reopen the case if the settlement is not completed.

Mashinsky has also been representing himself in proceedings seeking to vacate his federal conviction and sentence since May. Prosecutors opposed that petition in August, calling his arguments without merit, and his deadline to reply was set for Dec. 11, with the possibility of an extension if needed.

Source: crypto.news