The settlement permanently bars former cryptocurrency CEO Alex Mashinsky from the securities, commodities, and cryptocurrency industries, New York Attorney General Letitia James announced in a statement about the settlement. It follows James’s 2023 lawsuit over claims that Mashinsky misled Celsius Network investors about the lending platform’s safety and use of their digital assets.
James said Mashinsky must forfeit $10 million in ill-gotten gains to the federal government under his federal plea agreement. If he fails to do so, he must pay New York $25 million. He also must pay the state $10 million if he does not serve his full prison sentence, which the criminal court mandated and the Bureau of Prisons oversees.
The state’s announcement describes a settlement tied to a permanent industry ban and conditional payments. Mashinsky is serving a 12-year federal prison sentence in a parallel criminal case. He was also ordered in that case to forfeit more than $48 million to the federal government.
Former Cryptocurrency CEO Faces Permanent Ban
James sued Mashinsky in 2023, alleging he defrauded hundreds of thousands of investors, including more than 26,000 in New York. The lawsuit said he misled customers about Celsius’s safety to persuade them to deposit billions of dollars in digital assets.
The Office of the Attorney General said its investigation found that Mashinsky misrepresented Celsius’s safety, number of users, and investment strategies. It said he repeatedly described Celsius as safer than a bank, although the platform was not subject to the strict federal or state requirements that applied to banks.
Mashinsky also failed to register as a Celsius salesperson and as a securities and commodities dealer, in violation of New York law, according to the state. James said Celsius lost hundreds of millions of dollars on risky investments and that Mashinsky tried to conceal those losses from investors.
Celsius let investors deposit cryptocurrency in return for promises of high yields on their digital assets. The state said investors’ assets were routinely used in high-risk strategies, many of which produced losses. Mashinsky had claimed the company made safe, low-risk investments and lent assets only to credible and reputable entities, the announcement said.
As Celsius’s public face, Mashinsky appeared in interviews, public events, and social media posts to promote the platform and recruit investors. James said his statements encouraged customers to entrust Celsius with their savings.
Investors and Creditors Have Received Billions
The platform’s collapse left investors with substantial losses, the state said. One New York resident mortgaged two properties to invest with Celsius. A disabled veteran lost $36,000, which the announcement said had taken nearly a decade to save.
More than $3.4 billion has been distributed to Celsius creditors in bankruptcy as of August of 2026, according to the attorney general. That distribution is separate from the more than $48 million Mashinsky was ordered to forfeit in the federal case.
Celsius founders and executives were separately forced to pay $16.5 million to the Federal Trade Commission, the state announcement said. The settlement with New York sets additional payments if Mashinsky fails to meet the specified forfeiture or prison-sentence conditions.
The attorney general’s office said workers in the cryptocurrency industry who may have witnessed misconduct or fraud can file a whistleblower complaint, including anonymously. That invitation remains available through the office as the state enforces the settlement and the federal sentence continues.
Block Telegraph has also covered other cases involving alleged crypto investor losses, including the Key Coin Assets scheme and the Goliath Ventures case. A separate article considers the broader distinction between cryptocurrency and fraud in Chris Skinner’s view.
James said the ban is intended to prevent Mashinsky from doing business again in the securities, commodities, and cryptocurrency industries. His sentence and the settlement’s conditional payments remain tied to the federal plea agreement and court oversight.
