Alex Mashinsky barred from crypto under $35 million deal

New York Attorney General Letitia James reached a settlement with Alex Mashinsky, the former CEO and co-founder of Celsius, that permanently bars him from the securities, commodities and cryptocurrency industries. The agreement could require him to pay up to $35 million.

Announced Friday, the settlement closes New York’s 2023 civil case against Mashinsky. The lawsuit accused him of misleading hundreds of thousands of Celsius customers, including more than 26,000 New Yorkers, about the safety of their deposits.

Mashinsky must pay New York $25 million if he does not forfeit $10 million in ill-gotten gains to the federal government. He faces an additional $10 million payment if he does not serve his full prison sentence, which is overseen by the Bureau of Prisons. The $35 million is the maximum amount covered by the settlement, not a guaranteed payment.

The lifetime ban prevents Mashinsky from working in the securities, commodities or cryptocurrency industries. James alleged that he repeatedly described Celsius as safer than a bank while the company placed customer assets in high-risk strategies and concealed resulting losses.

“I will not allow scammers to use cryptocurrencies to prey on unsuspecting New Yorkers,” James said in a statement. She added that the ban would prevent Mashinsky from taking advantage of investors again.

Mashinsky is serving a 12-year federal prison sentence after pleading guilty to securities and commodities fraud. He was separately ordered to forfeit more than $48 million to the federal government in his criminal case.

The Securities and Exchange Commission filed its own action against Celsius and Mashinsky in July 2023 over the platform’s collapse. Celsius froze customer withdrawals in June 2022 and filed for bankruptcy the following month, leaving depositors unable to access their funds.

Other Celsius founders and executives agreed to pay $16.5 million to settle Federal Trade Commission charges. The bankruptcy process had returned more than $3.4 billion to creditors as of August.