New York has permanently barred former Celsius Network CEO Alex Mashinsky from the securities, commodities and cryptocurrency industries under a settlement that could require him to pay the state up to $35 million. The agreement resolves a 2023 state lawsuit over claims he misled investors about the cryptocurrency lender's safety before its collapse.
Attorney General Letitia James said in the settlement announcement that more than 26,000 New York investors were among hundreds of thousands affected. Mashinsky is serving a 12-year federal prison sentence in a parallel criminal case. The state agreement is separate from that prosecution and from payments made through Celsius' bankruptcy.
The attorney general's office sued Mashinsky in 2023, alleging that he encouraged customers to deposit billions of dollars in digital assets by portraying Celsius as safe while concealing losses from risky investments. It also said he failed to register as a Celsius salesperson and as a securities and commodities dealer, as New York law required.
Celsius offered customers yields in return for cryptocurrency deposits. Mashinsky appeared in interviews, at public events and on social media to recruit investors, the state said. Investigators found that he misrepresented the platform's safety, customer count and investment strategies, repeatedly describing Celsius as safer than a bank even though it was not subject to the same federal and state banking requirements.
According to the state investigation, Celsius used customer assets in high-risk strategies while Mashinsky described its lending and investments as low-risk. The company lost hundreds of millions of dollars, and the attorney general's office says he hid those losses. The release describes one New York resident who mortgaged two properties to invest and a disabled veteran who lost $36,000 accumulated over nearly a decade.
Payment terms depend on federal case
The settlement's maximum $35 million payment is conditional, rather than an amount New York has already collected. Mashinsky must pay $25 million to the state if he fails to forfeit $10 million in ill-gotten gains to the federal government, beyond assets already forfeited under his federal plea agreement. He must pay another $10 million to New York if he does not serve the full prison sentence ordered by the criminal court, according to the attorney general's office.
The federal criminal case separately ordered Mashinsky to forfeit more than $48 million. The state said Celsius investors and creditors had received more than $3.4 billion through the company's bankruptcy proceeding as of August 2026. Celsius founders and executives also were required to pay $16.5 million to the Federal Trade Commission in a separate matter.
Those figures describe different proceedings and recipients; they are not additional payments already made to New York under the new settlement. The permanent industry ban takes effect through the state agreement, while the conditional payment provisions depend on what happens in the federal forfeiture and prison cases.
State enforcement and investor reports
James called the settlement a measure to prevent Mashinsky from using the financial industry to attract new investors. Her office said it continues to investigate cryptocurrency misconduct and accepts whistleblower complaints from industry workers, including anonymous submissions.
The state's Investor Protection Bureau handled the Celsius case. The attorney general's office has pursued other cryptocurrency matters in recent years, including settlements or litigation involving Uphold, Galaxy Digital and NovaTechFx; those are separate cases and do not change the terms of the Mashinsky agreement.
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