A settlement has permanently barred Alex Mashinsky, the former CEO of cryptocurrency lender Celsius Network, from the securities, commodities, and cryptocurrency industries, New York Attorney General Letitia James announced in a statement about the settlement. The agreement follows James's 2023 lawsuit alleging that Mashinsky misled Celsius Network investors about the lending platform's safety and its use of their digital assets.

Under the settlement, 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 must also pay the state $10 million if he does not serve his full prison sentence, which was mandated by the criminal court and is overseen by the Bureau of Prisons.

The state's announcement describes a settlement built around a permanent industry ban and conditional payments, a structure that ties New York's financial recovery to Mashinsky's performance of his federal criminal obligations rather than to an upfront payment to the state. Mashinsky is currently serving a 12-year federal prison sentence in a parallel criminal case, in which he was also ordered to forfeit more than $48 million to the federal government.

Permanent Ban for Former Cryptocurrency CEO

James sued Mashinsky in 2023, alleging that he defrauded hundreds of thousands of investors, including more than 26,000 in New York. According to the lawsuit, 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 the platform's safety, number of users, and investment strategies. He repeatedly described Celsius as safer than a bank, even though the platform was not subject to the strict federal or state requirements that applied to banks, the office said.

The state said Mashinsky also failed to register as a Celsius salesperson or as a securities and commodities dealer, in violation of New York law. The ban goes beyond that registration lapse, ending his ability to operate in all three industries outright rather than conditioning his participation on state approval. James said Celsius lost hundreds of millions of dollars on risky investments and that Mashinsky attempted to conceal those losses from investors.

Celsius allowed investors to deposit cryptocurrency in exchange for promises of high yields on their digital assets. The state said investors' assets were routinely deployed 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, according to the announcement.

As the public face of Celsius, Mashinsky appeared in interviews, at public events, and in 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, while a disabled veteran lost $36,000 in savings that had taken nearly a decade to accumulate, according to the announcement.

More than $3.4 billion has been distributed to Celsius creditors through bankruptcy proceedings as of August 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 ordered to pay $16.5 million to the Federal Trade Commission, the state announcement said. The New York settlement sets additional payments if Mashinsky fails to meet the specified forfeiture or prison-sentence conditions. Taken together, the federal criminal case, the FTC order, and the New York settlement represent distinct enforcement tracks stemming from Celsius's collapse, each with its own monetary remedies, alongside the bankruptcy distributions to creditors.

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 as the state enforces the settlement and the federal sentence continues.

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.

Source: Block Telegraph