Key points

  • New York permanently barred Alex Mashinsky from participating in the securities, commodities and cryptocurrency industries under a settlement announced October 9.
  • The headline $35 million is conditional: $25 million is triggered if a required $10 million federal forfeiture is not completed, while another $10 million is tied to serving the full prison term.
  • The state settlement is separate from Mashinsky's federal conviction, 12-year sentence and other regulatory cases arising from Celsius's collapse.

New York closes its civil case

New York Attorney General Letitia James has reached a settlement with Celsius Network co-founder and former chief executive Alex Mashinsky, permanently barring him from participating in the securities, commodities and cryptocurrency industries. The agreement, announced October 9, resolves the state lawsuit filed in 2023. That case accused Mashinsky of misleading hundreds of thousands of investors, including more than 26,000 New Yorkers, about the safety of Celsius and the risks behind its yield products. The settlement adds a state-level prohibition to a series of criminal and regulatory outcomes following the lender's 2022 collapse.

The $35 million figure depends on two conditions

The maximum state payment is not an immediate flat penalty. New York said Mashinsky must pay $25 million if he fails to forfeit $10 million in ill-gotten gains to the federal government under his criminal plea agreement, in addition to assets already forfeited. A separate $10 million payment would become due if he does not serve the full prison sentence ordered by the criminal court and administered by the Bureau of Prisons. The structure means the amount ultimately collected by New York depends on compliance with the federal forfeiture and sentence conditions.

Related reporting: New York and Wyoming link crypto supervision under interstate pact

A permanent ban extends beyond cryptocurrency

The prohibition covers securities and commodities activity as well as cryptocurrency, preventing Mashinsky from returning to a similar financial business after incarceration. The attorney general's office said its investigation found that Celsius used customer assets in high-risk strategies while Mashinsky publicly described the platform as safer than a bank and presented its investments as low risk. The state also alleged that he acted without required registration as a Celsius salesperson and as a securities and commodities dealer. The settlement resolves those civil allegations without changing the outcome of the separate federal prosecution.

Federal conviction remains the core criminal judgment

Mashinsky is serving a 12-year federal prison sentence after pleading guilty to commodities fraud and securities fraud. The U.S. Attorney's Office for the Southern District of New York said the criminal court also ordered a $50,000 fine and forfeiture of $48,393,446. Prosecutors said he misrepresented Celsius's finances and manipulated the price of its CEL token, allowing him to profit from personal token sales while customers faced mounting losses. The New York settlement does not replace that sentence. It addresses the attorney general's civil claims and creates additional financial consequences if the specified federal obligations are not met.

Creditor distributions continue separately

Celsius's bankruptcy remains the main channel for returning assets to customers and other creditors. New York said more than $3.4 billion had been distributed through the proceeding by August 2026. That figure is distinct from the conditional payments in the Mashinsky settlement and does not mean every creditor has been made whole. Celsius customers had about $4.7 billion locked on the platform when withdrawals stopped in June 2022, according to the federal case. Recovery depends on bankruptcy distributions, claim treatment and the assets available to the estate rather than the industry ban alone.

The case reinforces rules for crypto lenders

The agreement shows how state investor-protection law can operate alongside federal criminal, commodities and consumer-protection actions. The Federal Trade Commission separately announced $16.5 million in payments from Celsius founders and executives in July, while imposing restrictions on future financial-services activity. For crypto lenders and yield platforms, the practical message is that marketing claims about safety, reserves, withdrawals and investment strategy can create liability even when the product uses digital assets. The immediate certainty is Mashinsky's permanent ban and the settlement's conditional framework; the final amount New York receives will depend on future compliance with its terms.

Sources

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