Alex Mashinsky, former CEO of crypto lending platform Celsius Network, faces up to $35 million in conditional payments under a settlement announced by New York Attorney General Letitia James on October 9, 2026.
This agreement resolves a 2023 lawsuit alleging that Mashinsky misled investors about Celsius’ safety. It also permanently bars him from doing businesses in the securities, commodities, and cryptocurrency industries.
Under the settlement, Mashinsky must pay New York $25 million if he fails to forfeit $10 million in illegal gains to the federal government, in addition to assets already forfeited under his federal plea agreement.
The settlement also requires him to pay $10 million to New York if he does not complete his 12-year prison sentence, as specified in the agreement.
“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,” James said.
Why New York sued Mashinsky
The New York Attorney General sued Mashinsky in 2023, accusing him of misleading hundreds of thousands of investors, including more than 26,000 people in New York.
The lawsuit claimed he encouraged customers to deposit billions of dollars in digital assets by presenting Celsius as a safe place to earn returns. Celsius allowed users to deposit cryptocurrencies and earn interest on their holdings.
Celsius promised a safe place to invest
Mashinsky regularly promoted the platform through interviews, public events, and social media. He told customers that Celsius made safe, low-risk investments and was even safer than a bank.
However, an investigation by the New York Attorney General’s office found that Celsius used customer funds in risky investment deals that led to losses. The office also found that Mashinsky misled investors about the company’s safety, the number of users, and its investment plans. According to the lawsuit, he tried to hide losses from customers while continuing to present Celsius as a safe place for their money.
The collapse left customers unable to withdraw funds
The situation became worse in June 2022, when Celsius stopped customers from withdrawing their funds during a wider downturn in the crypto market. The company filed for bankruptcy the following month, leaving many users unable to access their savings.
The losses affected people who had trusted the platform with money they had worked hard to save. The New York Attorney General’s office described the case of a resident who mortgaged two properties to invest in Celsius. A disabled veteran also lost $36,000, money he had spent nearly 10 years saving.
Mashinsky is serving a 12-year prison sentence
Mashinsky’s legal problems continued after the company’s collapse. He pleaded guilty to securities and commodities fraud in December 2024 and was sentenced to 12 years in federal prison in May 2025. He also agreed to forfeit more than $48 million to the federal government as part of his criminal case.
Meanwhile, Celsius creditors had received more than $3.4 billion through the company’s bankruptcy proceedings as of August 2026, according to the New York Attorney General’s office. This repayment process is separate from the new settlement with New York.
Other U.S. regulators have also taken action
Other U.S. regulators have also taken action against Mashinsky and Celsius executives. The Commodity Futures Trading Commission announced a court order imposing permanent trading and registration bans on Mashinsky.
In a separate case, the Federal Trade Commission reached a settlement requiring Mashinsky and two Celsius co-founders, Shlomi Daniel Leon and Hanoch Goldstein, to pay a combined $16.5 million.
In short, the New York settlement adds further conditions to Mashinsky’s legal consequences. Along with his prison sentence and other regulatory restrictions, it bars him permanently from doing business in the securities, commodities, and cryptocurrency industries.
Also Read: SEC to Discuss Crypto Assets at November 19 National Compliance Seminar
