New York Attorney General Letitia James has secured a permanent ban on Alex Mashinsky, the founder and former chief executive of Celsius Network, barring him from the cryptocurrency, securities, and commodities industries under a settlement that could require him to pay as much as $35 million.

The agreement, announced on October 9, 2026, resolves a civil lawsuit filed in 2023 that accused Mashinsky of misleading hundreds of thousands of investors about Celsius' financial condition, the risks of its investments, and the safety of customer deposits. Regulators alleged that he promoted the platform as a secure alternative to traditional banks while concealing losses from risky investments.

A post from regional crypto news outlet BitKE highlighted the remarks Mashinsky made before the platform's collapse:

'Banks are not your friends,' said @CelsiusNetwork CEO before the platform went bankrupt. @Mashinsky later pleaded guilty to securities and commodities fraud. #CryptoReality #CryptoFraud

— BitKE (@BitcoinKE) October 11, 2026

Settlement Terms

Under the settlement, Mashinsky must pay New York $25 million if he fails to forfeit an additional $10 million in ill-gotten gains to the federal government beyond assets already forfeited. He must also pay another $10 million if he does not serve his full prison sentence. Combined, the conditional payments could bring his total liability under the agreement to $35 million. The structure ties the state's recovery to the outcome of the federal criminal proceedings rather than imposing an unconditional penalty.

Mashinsky is currently serving a 12-year federal prison sentence after pleading guilty in December 2024 to securities and commodities fraud. He was separately ordered to forfeit more than $48 million.

A Series of Enforcement Actions

The New York settlement adds to a string of enforcement measures against the former executive, closing one of several legal fronts that followed the platform's failure. In June 2026, the Commodity Futures Trading Commission permanently barred him from trading in markets under its jurisdiction and from registering with the agency. A separate settlement with the Federal Trade Commission also barred him from the cryptocurrency and financial services industries. Taken together with the federal criminal case, the actions show how state and federal regulators each pursued separate resolutions against the same founder.

More than $3.4 billion had been distributed to Celsius creditors through bankruptcy proceedings as of August 2026, according to the New York attorney general's office.

The Collapse of Celsius

The case stems from Celsius' collapse in 2022, when the crypto lender froze customer withdrawals in June before filing for bankruptcy the following month. The failure became one of the defining events of that year's crypto downturn, a period in which several major digital-asset lenders and trading platforms suspended withdrawals, entered bankruptcy, or shut down, drawing intensified scrutiny from U.S. regulators. At its peak, the platform ranked among the largest crypto lenders in the industry, having attracted billions of dollars in customer assets by promising yields on cryptocurrency deposits. Its failure exposed depositors to substantial losses.

The settlement underscores the legal consequences facing crypto executives accused of misrepresenting investment risks and deploying customer funds without adequately informing investors. BitcoinKE's case-study coverage has framed the Celsius matter as one that could set a precedent for how prosecutors treat crypto investment scams and whether founders of failed platforms face permanent financial bans.

Source: BitcoinKE