New York Attorney General Letitia James announced Friday that she secured up to $35 million from former Celsius CEO Alex Mashinsky and obtained a permanent ban preventing him from working in the securities, commodities, or cryptocurrency industries.
James sued Mashinsky in 2023, alleging he misled hundreds of thousands of investors, including more than 26,000 New Yorkers, about the safety of their deposits with Celsius, a cryptocurrency lender.
Mashinsky is currently serving a 12-year federal prison sentence after pleading guilty to securities and commodities fraud. The Commodity Futures Trading Commission (CFTC) also permanently barred him from commodities activity in June.
Settlement Terms
Under the New York settlement, Mashinsky must pay the state $25 million if he does not forfeit $10 million in ill-gotten gains to the federal government. He must pay an additional $10 million if he fails to serve his full prison sentence, according to the attorney general's office.
Celsius Bankruptcy and Customer Recovery
Celsius froze customer withdrawals in June 2022 and filed for bankruptcy the following month. Customers and creditors have received more than $3.4 billion through the bankruptcy proceeding as of August. The company had planned to distribute approximately $3 billion in cryptocurrency and cash when it emerged from bankruptcy in 2024, using Coinbase and PayPal for payments.
According to James, Mashinsky promoted Celsius as safer than a bank while the company used customer assets in risky strategies and concealed losses from investors.
