Former Celsius chief executive Alex Mashinsky has been banned indefinitely from the digital asset, securities, and commodities sectors pursuant to a resolution with New York Attorney General Letitia James, which features conditional financial penalties totaling up to $35 million.
The New York agreement, made public on Friday, resolves a civil complaint filed in 2023 alleging that Mashinsky deceived hundreds of thousands of participants concerning the stability of Celsius ahead of its 2022 collapse.
Under the terms of the resolution, Mashinsky is required to pay the state of New York $25 million if he fails to surrender an extra $10 million in unlawful proceeds to the federal authorities beyond funds already confiscated, along with an additional $10 million should he fail to complete his entire prison term.
Mashinsky is currently serving a 12-year federal prison sentence for fraud and was ordered separately to forfeit upwards of $48 million. The federal prison term stems from his guilty plea entered in December 2024 to charges of securities and commodities fraud.
“Alex Mashinsky assured New Yorkers that his enterprise was a secure destination for their hard-earned capital, only to abandon them destitute when his hazardous investments failed,” James stated in the Friday announcement.
Celsius promised high yields before collapse
According to the 2023 lawsuit, Mashinsky marketed Celsius as a safer option compared to traditional banking institutions, advertising returns reaching 17% while reportedly concealing perilous bets and accumulating deficits.
By the early months of 2022, Celsius had accumulated roughly $20 billion in cryptocurrency holdings, yet faced difficulties generating sufficient revenue to uphold its pledged returns, leading to progressively riskier financial placements, according to the CFTC.
Celsius suspended customer cashouts in June 2022 and sought bankruptcy protection the following month, revealing a deficit exceeding $1 billion between its obligations and holdings.
As of August 2026, greater than $3.4 billion had been distributed to Celsius lenders via the insolvency proceedings, per the New York Attorney General’s Office.
Previous federal settlements and legal challenges
The New York pact succeeds distinct resolutions established with federal oversight bodies earlier in the year. In June, the Commodity Futures Trading Commission (CFTC) permanently prohibited Mashinsky from trading and maintaining registration with the commission. An April arrangement with the Federal Trade Commission had previously barred him from engaging in crypto and financial sectors and mandated a $10 million disbursement, alongside a mostly deferred judgment of $4.72 billion.
The Securities and Exchange Commission (SEC) likewise arrived at a preliminary accord with Mashinsky in September to settle its separate civil action, which a federal judge dismissed without prejudice on Sept. 29 pending formal conclusion of the accord.
Ever since May, Mashinsky has attempted to overturn his federal conviction and penalty, acting as his own legal counsel throughout the proceedings. Federal prosecutors disputed his motion in August, characterizing his arguments as “without merit.”
A magistrate rejected his motion for discovery, and an order issued on Oct. 5 maintained that ruling intact. Mashinsky holds a deadline of Dec. 11 to reply to the state’s objection regarding his petition.
Originally published at https://cointelegraph.com/news/celsius-founder-alex-mashinsky-permanently-banned-from-crypto-industry-in-ny-settlement?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound.
