Under the newly settled 2023 civil fraud lawsuit, the Celsius founder is permanently barred from trading crypto, securities, and commodities.
With the resolution of New York Attorney General Letitia James’s case involving up to $35 million in conditional payouts, former Celsius CEO Alex Mashinsky is permanently barred from cryptocurrency, securities, and commodities sectors.
Announced Friday, the New York agreement resolves a 2023 civil lawsuit alleging Mashinsky duped hundreds of thousands of investors regarding Celsius’s safety before it was collapsed in 2022.
Pursuant to the deal, Mashinsky faces $25 million in New York fines unless an extra $10 million in illicit profits is forfeited federally alongside earlier assets, plus another $10 million should he dodge his complete prison term.
Currently serving a 12-year federal prison term for fraud, Mashinsky lost over $48 million through a separate forfeiture order following his December 2024 guilty plea, from which his federal penalty was derived.
“Alex Mashinsky promised New Yorkers that his company was a secure place to invest their hard-earned savings, only to leave them penniless when his risky investments collapsed,”
James said in Friday’s announcement.
Celsius Promised High Yields Before Its Collapse
As detailed in the 2023 lawsuit, Mashinsky pitch-marketed Celsius as a secure banking alternative with 17% yields, while high-risk ventures and compounding losses were hidden from depositors.
Per the CFTC, Celsius had reeled in roughly $20 billion in digital assets by early 2022, yet it failed to generate enough revenue to maintain promised returns, sparking riskier investments that were driven by desperation.
Halting customer withdrawals in June 2022, Celsius filed for bankruptcy the next month, revealing a deficit exceeding $1 billion after its assets and liabilities were reconciled.
According to the New York Attorney General’s Office, Celsius bankruptcy administrators reached a major payout milestone by August 2026, when over $3.4 billion was disbursed to affected creditors.
Previous Federal Agreements and Ongoing Legal Disputes
Following earlier federal regulatory deals this year, the June CFTC order permanently barred Mashinsky from trading or registering, while an April FTC settlement banned him from crypto and finance, requiring a $10 million payout alongside a $4.72 billion judgment that was largely suspended.
The Securities and Exchange Commission (SEC) reached an in-principle deal with Mashinsky in September to resolve its separate civil lawsuit, which a federal judge dismissed without prejudice on Sept. 29 while final terms were being finalized.
Representing himself since May, Mashinsky has fought to throw out his federal conviction and sentence, though federal prosecutors countered in August, asserting that his legal challenges were deemed entirely without merit.
After a judge rejected his discovery request and an Oct. 5 order left that ruling intact, Mashinsky now has until Dec. 11 to submit a reply that was mandated in response to the government’s opposition.
