New York Attorney General Letitia James has secured a settlement requiring former Celsius Network chief executive Alex Mashinsky to pay up to $35 million and permanently barring him from working in the securities, commodities, or cryptocurrency industries. The agreement, announced Friday by James’ office, adds a state-level financial penalty and lifetime industry prohibition to the criminal sentence and federal regulatory sanctions already facing the former lending-platform executive.
James sued Mashinsky in 2023, alleging that he repeatedly misled Celsius customers about the company’s financial condition, the safety of its lending program, and its approach to managing customer assets. Celsius presented itself as a comparatively stable place to earn yield on digital assets, even as the business took increasingly risky positions and suffered mounting losses, according to the attorney general’s complaint.
The settlement closes the New York case against Mashinsky, whose collapse from one of cryptocurrency’s most recognizable lending executives to a convicted federal defendant has now produced sanctions from state authorities, the Federal Trade Commission, and the Commodity Futures Trading Commission. Mashinsky is serving a 12-year federal prison sentence.
New York adds a permanent industry ban
The agreement permanently prohibits Mashinsky from serving in the securities, commodities, and cryptocurrency sectors. That restriction reaches beyond operating a crypto lending business and would prevent him from returning to regulated financial markets in roles covered by the order.
James’ lawsuit centered on the gap between Celsius’ public messaging and its financial position. The company promoted its Earn Interest Program as a way for customers to generate returns on deposited cryptoassets, while Celsius used those assets in lending, trading, and other strategies exposed to market and counterparty risk.
Celsius froze withdrawals in June 2022 as crypto markets fell sharply and the company faced a widening liquidity crisis. The halt trapped customer assets on the platform and preceded its bankruptcy filing the following month.
The attorney general alleged that Mashinsky continued to publicly reassure customers as Celsius’ condition worsened. Such claims became a recurring feature of enforcement actions against the company and its former executive team, with regulators focusing on promotional statements, risk disclosures, and the use of customer property.
More than 100,000 Celsius customers were left pursuing roughly $4.7 billion in losses after the platform’s failure, according to figures cited in the proceedings. James’ office said more than 26,000 New Yorkers were affected by Celsius’ withdrawal freeze.
Federal agencies had already imposed separate penalties
The New York settlement arrives after two federal enforcement agreements imposed their own restrictions on Mashinsky.
In April, the Federal Trade Commission settled its case against him with a suspended $4.7 billion judgment, a $10 million payment, and an 18-year reporting requirement. The FTC agreement also barred Mashinsky from involvement in cryptocurrency and financial services businesses.
The suspended judgment means the larger amount remains enforceable under circumstances set by the settlement, while the agreement requires the specified payment. The FTC’s order focused on allegations that Celsius and its executives deceived customers about the safety of deposits and the company’s ability to meet withdrawal demands.
The Commodity Futures Trading Commission reached a separate settlement with Mashinsky in June. That order imposed permanent trading and registration bans and prohibits future violations of the agency’s anti-fraud rules.
Taken together, the orders leave Mashinsky facing overlapping prohibitions from agencies responsible for consumer protection, commodities markets, and state financial enforcement. The New York resolution also gives the state a direct claim for restitution or payments under its own settlement rather than relying solely on the federal cases.
Bankruptcy distributions have returned billions to creditors
Celsius’ bankruptcy estate has distributed more than $3.4 billion to creditors, according to the company’s bankruptcy process. Those recoveries came through a combination of cryptocurrency distributions, cash payments, asset sales, and litigation pursued by the estate.
The distributions do not erase the damage caused by the withdrawal freeze, particularly for customers who lost access to assets during a severe market downturn. They do show that the bankruptcy process has recovered a substantial portion of value compared with the immediate aftermath of Celsius’ collapse, when the firm’s liabilities and customer claims appeared deeply impaired.
The estate has continued to pursue claims connected to transactions made before bankruptcy. In late 2025, the Celsius recovery effort obtained a $299.5 million payout from Tether related to Bitcoin collateral that Celsius alleged had been improperly liquidated. That recovery was separate from the enforcement cases against Mashinsky.
Celsius’ operating assets were reorganized after bankruptcy under a structure managed by the Fahrenheit consortium. The successor operation was designed to separate remaining mining and digital-asset activities from the failed lending platform, whose brand became synonymous with the 2022 credit crisis.
A case shaped by Celsius’ marketing claims
Mashinsky’s case has become one of the clearest examples of regulators targeting the way crypto yield products were sold before the 2022 market failures. Celsius marketed high returns and emphasized its own financial strength, while customers generally had limited visibility into how deposited assets were being deployed or whether the platform could withstand a wave of withdrawals.
The enforcement outcomes do not create a new legal framework for crypto lending, but they reinforce the risks of businesses making safety claims that exceed their disclosed liquidity, collateral, or risk-management practices. For platforms handling customer assets, public assurances can become central evidence when withdrawals are later halted and losses emerge.
James’ settlement brings the state case to an end while the financial consequences of Celsius’ bankruptcy continue to be managed through creditor distributions and remaining estate litigation. Mashinsky, meanwhile, will leave prison subject to permanent bans that effectively foreclose a return to the industries that made him a prominent figure in crypto.
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