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FollowingNew York State Attorney General and Celsius co-founder reached a settlement: Fines up to $35 million and permanent bans on securities and cryptocurrency industries
New York State Attorney General Letitia James announced on Friday that it has received up to $35 million from Alex Mashinsky, co-founder and former CEO of Celsius, and has permanently banned him from entering the securities, commodities and cryptocurrency industries. The settlement marks the formal conclusion of a civil lawsuit filed in 2023 by the state that accused Masinsky of misleading hundreds of thousands of investors-including more than 26,000 New Yorkers-into believing that deposits at the failed crypto lending platform were safe.
Previously, Masins Gene pleaded guilty to securities and commodity fraud, was sentenced to 12 years in federal prison, and was individually ordered to surrender more than $48 million in assets to the U.S. government.
Details of the terms of the settlement
According to the terms of the agreement, if Masinsky fails to surrender US$10 million in ill-gotten gains to the federal government, he must pay US$25 million to New York State. The amount is an additional payment on top of assets transferred under its federal plea agreement. In addition, he faces an additional $10 million in fines if he fails to serve the full sentence (supervised by the Federal Bureau of Prisons). The lifetime ban would completely block his chances of working in the securities, commodities or cryptocurrency industries.
The New York State Attorney General's Office filed a lawsuit against Masinsky in 2023, accusing him of repeatedly claiming that Celsius was safer than banks while the company used client assets to conduct high-risk strategic operations and concealed resulting losses.
At the same time, the U.S. Securities and Exchange Commission (SEC) also took independent action against Celsius and its founder Masinsky in July 2023, citing the platform's eventual collapse.
Broader crackdown on crypto industry founders
New York State's ban is an extension of a series of penalties against Celsius's management. The founder and executive of Celsius were forced to pay $16.5 million to settle the Federal Trade Commission (FTC) allegations. As of August, more than $3.4 billion had been returned to creditors through bankruptcy proceedings. The case also fits into a broader trend of recent enforcement actions against crypto figures convicted or accused of fraud, such as Adam Izak's 78-month sentence earlier this year.
Follow-up
$35 million is a cap amount, not a guaranteed fixed payout. The $25 million obligation only applies if Masinski fails to pay $10 million to federal authorities; the additional $10 million applies only if he gets out of prison early.
Celsius froze customers 'withdrawal requests in June 2022 and filed for bankruptcy a month later, leaving many depositors in financial trouble. "I will not allow scammers to use cryptocurrency to plunder unsuspecting New Yorkers," James said. She added that the ban would prevent Masinsky from taking advantage of investors again.
