New York Settlement Bars Ex-Celsius CEO Alex Mashinsky and Could Require Up to $35 Million
New York Attorney General Letitia James says a settlement permanently bars former Celsius CEO Alex Mashinsky from the securities, commodities and cryptocurrency industries. It could also require him to make up to $35 million in payments to New York, depending on whether certain conditions are met.
- Up to $35 million: Two separate conditions could trigger payments to New York.
- Permanent industry ban: The NYAG says it covers securities, commodities and cryptocurrency.
- Federal sentence: Mashinsky is serving 12 years in prison and was ordered to forfeit more than $48 million.
- Celsius distributions: More than $3.4 billion had been distributed to creditors by August 2026, according to the NYAG.
The NYAG says Mashinsky misled hundreds of thousands of Celsius investors about the platform’s safety, including more than 26, 000 New Yorkers. According to the state, Celsius put customer deposits into high-risk strategies that caused losses. The state says Mashinsky concealed some of those losses while promoting Celsius as a safe place to invest.
These are the state’s allegations and findings from its investigation. The settlement resolves the NYAG’s civil action and is separate from Mashinsky’s federal criminal case. The settlement materials do not say whether Mashinsky admitted or denied liability.
Celsius was a crypto lending platform, not a bank. The NYAG says customers deposited cryptocurrency in exchange for promised yields, and Celsius was not subject to the same strict state and federal requirements as banks. That distinction matters: a crypto account offering yield is not the same as a bank deposit.
What could trigger the $35 million in payments?
The settlement sets out two conditional payments. Mashinsky must pay New York $25 million if he fails to forfeit $10 million in ill-gotten gains to the federal government, in addition to assets already forfeited. He must pay another $10 million to New York if he does not serve his full prison sentence, as required by the criminal court and overseen by the Bureau of Prisons.
The $35 million figure is a maximum, not a guaranteed or immediate payment. The NYAG’s release does not give a payment schedule or spell out every enforcement detail. It also does not explain how these conditions relate to the separate federal forfeiture order.
The order itself should be described precisely: the NYAG says Mashinsky was ordered to forfeit more than $48 million in the federal case. An order alone does not establish that the full amount has been collected or transferred.
A permanent ban and a separate federal sentence
The NYAG describes the settlement’s ban as permanent, covering the securities, commodities and cryptocurrency industries. The release gives no further detail about which roles or activities are prohibited, so the ban’s scope should not be read more broadly than those stated categories.
Attorney General James described the case this way:
“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. I will not allow scammers to use cryptocurrencies to prey on unsuspecting New Yorkers. We took action to hold Mashinsky accountable, and now we are barring him from the securities industry so he cannot take advantage of investors again.”
“Penniless” is James’s description, not a finding that every Celsius creditor lost everything. Mashinsky is also serving a 12-year federal prison sentence in a separate case. The NYAG says Celsius founders and executives were forced to pay $16.5 million to the Federal Trade Commission. Its release does not name the payors or explain the legal basis for the payment.
Celsius creditors have received distributions, not necessarily full repayment
Celsius filed for Chapter 11 bankruptcy protection on July 13, 2022. The bankruptcy court confirmed a modified reorganization plan on November 9, 2023, and the plan took effect on January 31, 2024.
The NYAG says more than $3.4 billion had been distributed to Celsius creditors through the bankruptcy by August 2026. That figure reflects distributions, not whether every creditor recovered the full value of their allowed claim. The NYAG release does not specify how the figure was valued or how much was paid in cash versus cryptocurrency.
Creditors should also watch out for impersonation scams. Stretto, the bankruptcy administrator, warns that Celsius is not sending distributions directly to creditors’ wallets and does not request personal account information by email.
Questions have also arisen about Mashinsky’s bankruptcy position, including whether his waiver of bankruptcy rights benefits creditors.
Key questions about the Mashinsky settlement
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What triggers the New York payments?
Mashinsky must pay $25 million if he fails to forfeit $10 million in ill-gotten gains to the federal government, in addition to assets already forfeited. He must pay another $10 million if he does not serve his full sentence.
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What industries is Mashinsky banned from?
The NYAG describes a permanent ban covering the securities, commodities and cryptocurrency industries. The release does not specify which roles or activities are covered.
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Was the more than $48 million already collected?
The NYAG says Mashinsky was ordered to forfeit more than $48 million. That does not confirm that the full amount has been collected.
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Have Celsius creditors been fully repaid?
Not necessarily. The NYAG reports more than $3.4 billion in distributions by August 2026, but that total does not show whether every creditor recovered the full value of their allowed claim.
