New York Attorney General Letitia James announced a settlement Friday securing up to $35 million from former Celsius Network CEO Alex Mashinsky and permanently banning him from participating in the state's securities, commodities, and cryptocurrency industries. The resolution closes out a civil fraud case that accused Mashinsky of promising New Yorkers their savings were safe with Celsius, only to leave many of them penniless.
“We're barring Alex Mashinsky, the former CEO of Celsius, from the financial industry after he promised New Yorkers that his company was a secure place to invest their savings, only to leave them penniless,” NY AG James
wrote in announcing the deal. “I won't allow scammers to prey on unsuspecting New Yorkers.” The statement caps a legal fight her office first launched in New York Supreme Court in January 2023, when it filed a civil fraud lawsuit alleging Mashinsky defrauded more than 26,000 New Yorkers by falsely claiming Celsius was safer than a bank and by failing to register as a securities or commodities dealer, according to the
New York State Attorney General
.
How the Settlement Money Is Structured
The payment terms attached to the October settlement carry built-in incentives tied to Mashinsky's federal prison obligations. Under the deal, he must surrender $10 million in ill-gotten gains to the federal government or instead pay $25 million directly to New York State, with an additional $10 million owed to the state if he fails to serve his full federal prison term, according to KuCoin. The structure effectively ties New York's financial recovery to his compliance with the terms of his federal sentence.
That federal sentence is substantial. U.S. District Judge John G. Koeltl sentenced Mashinsky in Manhattan federal court in May 2025 to 12 years in prison after he pleaded guilty in December 2024 to federal commodities fraud and securities fraud charges, the outlet's report notes. Federal prosecutors had originally sought a 20-year sentence for the scheme, per the same account.
Federal Penalties Piled On Top of State Action
Alongside the prison term, Mashinsky was ordered to forfeit more than $48 million in personal ill-gotten gains, pay a $50,000 fine, and complete three years of supervised release once he's discharged, according to CCN. Separately, in April 2026, U.S. District Judge Denise L. Cote approved an agreement requiring Mashinsky to pay $10 million to the Federal Trade Commission to settle civil fraud litigation, while suspending an earlier $4.72 billion civil judgment against him, as reported by legal news coverage of the Southern District of New York ruling.
Insider cooperation played a direct role in building the case against Mashinsky. Former Celsius Chief Revenue Officer Roni Cohen-Pavon pleaded guilty in September 2023 to price manipulation and wire fraud, provided substantial assistance to federal prosecutors, and was sentenced to time served in May 2026, according to Cryptonews.net. Federal prosecutors considered Cohen-Pavon's cooperation likely a significant factor in Mashinsky's decision to admit guilt ahead of trial.
Mashinsky's Own Bid to Overturn His Sentence
Mashinsky has not stopped fighting the case from behind bars. In August 2026, federal prosecutors from the Southern District of New York asked the court to reject a pro se petition from Mashinsky seeking to vacate his 12-year prison sentence, calling his claims blaming FTX and former colleagues “without merit,” according to TradingView News.
The Scale of Celsius's Collapse
The penalties against Mashinsky trace back to the scale of what Celsius Network became before it fell apart. Prior to its July 2022 Chapter 11 bankruptcy filing, the platform managed approximately $25 billion in customer assets before freezing withdrawals in June 2022. Celsius had a $1 billion balance-sheet deficit, according to the U.S. Department of Justice. Celsius operated without the banking oversight or deposit insurance that traditional financial institutions carry, even as it collected billions in customer funds.
Celsius Network's Chapter 11 bankruptcy proceedings have distributed over $3.4 billion in assets to affected investors and creditors as of August 2026. That bankruptcy recovery process operates separately from the forfeitures and fines state and federal agencies have extracted from Mashinsky personally.
Friday's settlement marks a state-level enforcement step in a case that spanned securities regulators, federal criminal prosecutors, the FTC, and bankruptcy court over more than three years. Mashinsky is currently serving his 12-year federal sentence, and the New York settlement ensures that whenever that sentence ends, he will be permanently excluded from returning to the state's securities, commodities, and digital asset markets.
