On Friday, October 9, 2026, New York Attorney General Letitia James announced that Alex Mashinsky, a co-founder and former chief executive of the crypto lender Celsius Network LLC, has agreed to a settlement worth up to $35 million and will be permanently shut out of the securities, commodities, and cryptocurrency businesses.
The deal ends a case the attorney general’s office brought in 2023, which alleged that Mashinsky misled hundreds of thousands of people about how safe their money was at Celsius. More than 26,000 of those customers lived in New York. Prosecutors said his statements drew billions of dollars in digital assets onto the platform.
Celsius paid customers high returns for crypto they deposited, then put that money to work elsewhere. State investigators concluded that Mashinsky, who acted as the firm’s chief promoter through interviews, conferences and social media posts, painted a false picture of the company. They said he misstated how many users Celsius had, how it invested deposits and how secure those deposits were, at times telling audiences the firm was safer than a bank.
Investigators said the reality was different. Celsius did not face the federal and state oversight that applies to banks, and customer funds were exposed to substantial risk. Although Mashinsky publicly described the company’s investments as conservative and its borrowers as reputable, the office found that deposits were regularly put into high-risk strategies. Many of those strategies lost money, and the losses were not disclosed. In total, Celsius lost hundreds of millions of dollars. The state also said Mashinsky never registered as a salesperson for the company or as a securities and commodities dealer, as New York law requires.
The company ultimately collapsed. The attorney general’s office pointed to two New Yorkers as examples of the damage: one took out mortgages on two properties to put money into Celsius, and a disabled veteran lost $36,000 that he had spent almost ten years saving.
Mashinsky is serving a 12-year sentence in federal prison after pleading guilty in a related criminal case, in which he was also ordered to give up more than $48 million to the federal government.
The state’s settlement is tied to that federal case. Mashinsky will owe New York $25 million if he does not surrender a further $10 million in illegally obtained gains to federal authorities, on top of what he has already forfeited. He will separately owe the state $10 million if he fails to complete the entire prison term imposed by the criminal court and administered by the Bureau of Prisons.
Elsewhere in the Celsius fallout, the bankruptcy process had returned more than $3.4 billion to investors and creditors as of August 2026. Celsius’s founders and executives also paid $16.5 million to the Federal Trade Commission.
“Alex Mashinsky promised New Yorkers that his company was a secure place to invest their hard-earned savings, only to leave them penniless when his risky investments collapsed,” James said in a statement. She said she would not let scammers use cryptocurrency to target New Yorkers and that the ban would keep Mashinsky from taking advantage of investors again.
The settlement follows other crypto-related actions by James’ office. In April 2026, the platform Uphold paid more than $5 million over its promotion of a fraudulent scheme run by Cred, LLC. In March 2025, Galaxy Digital agreed to a $200 million settlement over claims it manipulated the price of Luna tokens.
In January 2025, the office became the first regulator to serve notice of a lawsuit by sending a nonfungible token to wallets used by scammers. In June 2024, it sued NovaTechFx, accusing the company of running a pyramid scheme that took more than $1 billion in cryptocurrency from hundreds of thousands of investors worldwide, including over 11,000 in New York.
The attorney general’s office invited people working in the crypto industry who have seen wrongdoing to file whistleblower complaints, which can be submitted anonymously.
Source: New York Attorney General
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