New York AG Secures Up to $35M and Permanent Industry Ban from Celsius Founder Alex Mashinsky
New York settles with Celsius co-founder
New York Attorney General Letitia James announced on October 9, 2026, that she secured a civil settlement with former Celsius co-founder and CEO Alex Mashinsky. The deal includes up to $35 million in penalties and a permanent ban preventing Mashinsky from working in the securities, commodities, or cryptocurrency industries.
Mashinsky is already serving a 12-year federal prison sentence after pleading guilty to securities and commodities fraud related to Celsius. The New York settlement is a separate civil matter.
Key numbers from the settlement
- Up to $35 million in total payments owed by Mashinsky.
- Mashinsky must forfeit $10 million in alleged ill-gotten gains to the federal government, or pay New York an additional $25 million.
- A further $10 million penalty applies if Mashinsky does not serve his full prison sentence.
- The lawsuit covered claims affecting more than 26,000 New York residents.
- Celsius customers and creditors received over $3.4 billion through bankruptcy proceedings as of August 2026.
What the lawsuit alleged
James filed the lawsuit in 2023. Her office accused Mashinsky of misleading hundreds of thousands of Celsius investors about the safety of their deposits. According to the attorney general, Mashinsky promoted Celsius as safer than a bank while the company invested customer assets in risky strategies and concealed losses.
James stated: "I will not allow scammers to use cryptocurrencies to prey on unsuspecting New Yorkers."
Timeline of Celsius's collapse
Celsius froze customer withdrawals in June 2022. The company filed for bankruptcy in July 2022, a month later. When Celsius emerged from bankruptcy in 2024, the company planned to distribute roughly $3 billion in crypto and cash to creditors, using Coinbase and PayPal for payments. By August 2026, the attorney general's office reported that distributions had exceeded $3.4 billion.
What is confirmed
The settlement between New York's attorney general office and Mashinsky is publicly documented. Mashinsky's 12-year federal prison sentence and guilty plea for securities and commodities fraud are confirmed. A separate permanent ban from commodities activity was issued by the Commodity Futures Trading Commission (CFTC) in June 2026. Celsius's bankruptcy and customer distribution totals are reported by the attorney general's office.
Why this matters
This case is part of a broader pattern of regulators holding crypto executives personally accountable after major failures. The settlement adds a permanent industry ban on top of criminal penalties, signaling that state-level enforcement can pursue parallel civil actions even after federal prison sentences are served. For Celsius customers, the bankruptcy process has returned over $3.4 billion so far, though the total amount owed was larger.
Sources
Newisty Editorial Team covers technology, cryptocurrency, digital products, online platforms, developer tools and the wider digital economy. Our content is researched from official sources, company announcements, public documentation, market data and other primary or reputable sources. Articles are reviewed and edited before publication for clarity, accuracy and useful context.