Contents
The New York Settlement and Industry Ban
The New York Attorney General's office announced a major settlement on October 9, 2026, securing up to $35 million from Alex Mashinsky, the former chief executive officer of Celsius Network 12. Under the terms of the agreement, Mashinsky faces a permanent ban that prevents him from ever working in the securities, commodities, or cryptocurrency industries within the state of New York 12.
The financial penalties are structured conditionally based on his compliance with other legal obligations 12. Mashinsky must pay $25 million to the state of New York if he fails to forfeit $10 million in illicit gains to the federal government as part of his federal plea agreement 12. Furthermore, he is required to pay an additional $10 million if he does not serve his full prison sentence 12. This state-level action follows other regulatory bans, including a permanent commodities trading ban issued by the Commodity Futures Trading Commission in June 1 and a $10 million settlement with the Federal Trade Commission that also bars him from the cryptocurrency sector 2.
Background of the Fraud and Celsius Collapse
The settlement resolves a civil lawsuit initiated by Attorney General Letitia James in 2023 12. The state's lawsuit accused Mashinsky of defrauding hundreds of thousands of investors globally, which included more than 26,000 residents of New York 12. Investigators found that Mashinsky repeatedly marketed Celsius as a secure platform that was safer than a traditional bank 12.
However, the company actively deployed customer deposits into highly speculative and risky investment strategies while deliberately concealing the subsequent losses 12. The real-world impact on retail investors was severe; the Attorney General's office highlighted cases such as a New York resident who mortgaged two properties to fund Celsius deposits, and a disabled veteran who lost $36,000 in savings accumulated over nearly a decade 2. The platform's financial instability culminated in June 2022 when Celsius froze all customer withdrawals, followed by a Chapter 11 bankruptcy filing in July 2022 1.
Criminal Prosecution and Sentencing
In addition to civil and regulatory actions, Mashinsky faced severe criminal consequences 12. He was arrested in July 2023 and subsequently released on a $40 million bail while awaiting trial 2. After pleading guilty to charges of securities and commodities fraud, Mashinsky was sentenced to 12 years in federal prison in May 2025 12.
Federal prosecutors had originally advocated for a longer prison term of 20 years 2. The criminal court also ordered Mashinsky to forfeit more than $48 million in assets 2. Despite his guilty plea and subsequent sentencing, Mashinsky has filed a formal request with the court to vacate his 12-year prison sentence 2. Attorney General James emphasized that the state would not tolerate fraudulent actors who exploit digital assets to target unsuspecting investors 12.
Bankruptcy Distributions and Asset Forfeiture
The resolution of Mashinsky's personal liabilities coincides with ongoing efforts to return funds to Celsius creditors 12. As part of his legal agreements, Mashinsky forfeited all personal claims to any proceeds from the Celsius bankruptcy 2.
The bankrupt lending platform had originally outlined a plan to distribute roughly $3 billion in cash and cryptocurrency to its users upon its exit from bankruptcy in 2024, utilizing Coinbase and PayPal to facilitate the transactions 1. According to updates from the Attorney General's office, Celsius customers and creditors had successfully recovered more than $3.4 billion through the bankruptcy process as of August 2026 12.
What is not yet established
- Whether the court will grant Mashinsky's request to vacate his 12-year prison sentence.
- Whether Mashinsky will successfully forfeit the $10 million in ill-gotten gains to the federal government, which dictates his state-level payment obligations.
- Whether Mashinsky will serve his full prison sentence, which determines if he owes an additional $10 million penalty.
Frequently asked questions
What are the specific terms of Mashinsky's financial settlement with New York?
Mashinsky must pay up to $35 million under conditional terms: $25 million to New York if he does not forfeit $10 million to the federal government, and an additional $10 million if he fails to serve his full 12-year prison sentence 12.
How much have Celsius creditors recovered so far?
As of August 2026, Celsius customers and creditors have received more than $3.4 billion through the company's bankruptcy proceedings 12.
What other regulatory bans does Mashinsky face?
Mashinsky is permanently barred from the securities, commodities, and crypto industries in New York 12. He was also permanently banned from commodities trading by the CFTC in June and from the crypto industry via a $10 million settlement with the FTC 12.
Sources
- CoinDesk — New York AG secures up to $35 million and lifetime crypto ban from Celsius’ Alex Mashinsky (2026-10-09) https://www.coindesk.com/policy/2026/10/09/new-york-ag-secures-up-to-usd35-million-and-lifetime-crypto-ban-from-celsius-alex-mashinsky
- Decrypt — New York AG Secures Up to $35M and Industry Ban From Ex-Celsius CEO Alex Mashinsky (2026-10-09) https://decrypt.co/380592/new-york-ag-secures-up-to-35m-and-industry-ban-from-ex-celsius-ceo-alex-mashinsky
Revision history
Published