Alex Masinsky gets lifetime cryptocurrency ban in New York settlement

Former Celsius CEO Alex Mashinsky agrees to accept a lifetime ban on cryptocurrency and securities industries

Former Celsius CEO Alex Mashinsky has agreed to accept a lifetime ban in the cryptocurrency, securities and commodities industries under a New York state settlement with conditional payment clauses of up to $35 million.

Summary of the core content of the settlement

The New York State settlement ties potential payments of $35 million to asset forfeiture and terms of serving sentence. Mashinsky must relinquish $10 million worth of illegal gains to the federal government or pay $25 million to New York State. The former Celsius boss has been sentenced to 12 years in prison after pleading guilty to fraud. As of August 2026, Celsius's creditors have received more than US$3.4 billion in settlements through bankruptcy distribution.

New York Attorney General Letitia James announced the agreement on October 9, resolving a civil lawsuit filed by his office in 2023. The lawsuit accuses Mashinsky of promoting Celsius as a safe place to store cryptocurrencies. The office said the case involved hundreds of thousands of investors, including more than 26,000 New York state residents.

Mashinsky's payment terms depend on asset forfeiture and sentence served.

Under the agreement described by the Attorney General's Office, Mashinsky owes New York State $25 million if he fails to hand over another $10 million in illegal proceeds to the federal government. The asset forfeiture amount required is independent of the assets he has surrendered in the criminal case.

The announcement stated that the second condition was that if Mashinsky did not serve his sentence, he would have to pay New York State $10 million. The office stated that the criminal court imposed the sentence and its execution was supervised by the Prison Administration.

Dissemination and security promises

In a parallel federal indictment, Mashinsky was sentenced to 12 years in prison and ordered to confiscate more than $48 million in assets, the Attorney General's Office said. His plea in December 2024 covered securities fraud and commodity fraud counts.

James said in the announcement: "Alex Mashinsky assured New Yorkers that his company was a safe place to invest their hard-earned savings, but when his risky investments collapsed, it left them with nothing."

The state case also involved registration violations. According to the Attorney General's Office, Mashinsky did not register as a salesperson for Celsius or as a securities and commodities dealer, violating New York state law.

Celsius's security claims cover up investment risks

During the investigation, the Attorney General's Office found that Mashinsky misled investors about Celsius's investment strategy, number of users and security perceptions. The office said he has repeatedly described the platform as safer than banks, although Celsius is not subject to the same strict federal and state regulations as banks.

According to a state announcement, Mashinsky promoted Celsius through interviews, public appearances and social media, claiming that the company makes low-risk investments and only lends to trusted borrowers. But investigations revealed that client assets were actually used to fund high-risk strategies, and he concealed hundreds of millions of dollars in losses.

The Attorney General's Office described a New York investor who mortgaged two properties to put money into Celsius. Another disabled veteran lost $36,000 he had accumulated over the past decade.

Federal regulators have also challenged how Celsius generates its promotional returns. As previously reported, the Commodity Futures Trading Commission's (CFTC) case against Celsius alleges that the lending institution pooled client cryptocurrencies to fund investments and weekly interest payments.

According to the CFTC allegations detailed in the report, Celsius is increasingly relying on unsecured loans and risky decentralized finance (DeFi) transactions while assuring customers that its assets are safe. Regulators said the company received approximately $20 billion in funding during the period covered by the case.

According to the Federal Trade Commission (FTC), Celsius stopped customer withdrawals in June 2022 and filed for bankruptcy the following month. The Attorney General's Office said that as of August 2026, bankruptcy proceedings had distributed more than $3.4 billion to creditors.

Federal settlement restricts asset services and regulated transactions

According to the FTC order, in April this year, Mashinsky accepted another FTC agreement that permanently restricted its promotion and provision of asset-related services.

The FTC order, recorded by U.S. District Judge Denise Cote, covers services that allow customers to deposit, exchange, invest or withdraw assets. Under the order, the agreement provides for a $4.72 billion judgment amount, most of which will be suspended after payment and financial disclosure conditions are met.

The order calls for a payment of US$10 million, which can be met by making qualifying payments to the Department of Justice under criminal forfeiture arrangements. It also allows the FTC to seek to reinstate suspensive judgments if a court determines that Mashinsky misstated asset values, concealed positions or omitted significant financial information.

According to reports on June 19, by June, a federal consent order had also permanently banned Mashinsky from trading in markets regulated by the CFTC and from registering with institutions.

Other Celsius co-founders have also reached an FTC settlement. In July, the agency announced that Shlomi Daniel Leon and Hanoch "Nuke" Goldstein would jointly pay $6.5 million, bringing the total required payments for the three co-founders to $16.5 million.

According to FTC data, Leon's payment amount was US$4.1 million and Goldstein's was US$2.4 million. Their agreement also limits future asset-related business and prohibits false statements about products or services.

The agency accused Celsius falsely of promising customers unlimited access to deposits, sufficient reserves, and a $750 million insurance policy to protect their funds. The FTC said in a July announcement that executives continued to reassure customers that deposits were safe shortly before enforcing the bankruptcy filing.

Court order sets a deadline for Mashinsky's remaining proceedings

In the SEC's civil case, U.S. District Judge Paul Engelmayer signed an order on September 29 to dismiss the lawsuit without affecting its validity after the parties reported a settlement in principle.

The order gives both parties 90 days to apply for a retrial if the settlement is not completed. In order to preserve the court's power to enforce the agreement, Engelmayer instructed them to submit the agreement within the same period and include it in public records.

In addition, since May, Mashinsky has been voluntarily participating in the process seeking to quash his federal conviction and sentence. Federal prosecutors opposed his petition in August, calling its arguments "baseless."

A ruling issued on September 29 by U.S. District Judge John Koeltl rejected requests for evidence without affecting their validity, including three sets of requests dismissed because they were found to be moot. The October 5 order upheld the decision, and Koeltl set December 11 as the deadline for Mashinsky to respond to government objections, with further extensions if needed.