Imprisoned Celsius Founder Alex Mashinsky Banned for Life From New York's Financial Markets, Faces Up to $35 Million More

Published Oct. 14, 2026. Case statuses are current as of that date.

Alex Mashinsky told crypto investors that Celsius Network was safer than a bank. He is now in federal prison for lying to them. On Oct. 9, 2026, New York Attorney General Letitia James announced a settlement that permanently bars the former Celsius CEO from the securities, commodities and cryptocurrency industries. Under the deal he may owe the state up to $35 million [1].

Alex Mashinsky, a co-founder and former CEO of crypto lending platform Celsius Network LLC, pleaded guilty in December 2024 to securities fraud and commodities fraud. He was sentenced on May 8, 2025, to 12 years in prison [2]. He "is currently serving 12 years in federal prison as part of a federal plea agreement," the attorney general's office said [1].

Status note: Mashinsky's criminal conviction is final. He pleaded guilty and, under his plea agreement, cannot appeal his sentence [2]. The New York case was a civil lawsuit resolved by settlement.

How the scheme worked

Celsius was a crypto lending platform. Customers deposited digital assets in return for promises of high yields. According to the attorney general's office, Mashinsky was the company's public face, "appearing regularly in interviews, at public events, and on social media to promote the platform and recruit investors" [1].

The attorney general's investigation found that Mashinsky:

• Claimed Celsius was safer than a bank. He did so repeatedly, but Celsius "was not subject to the strict federal or state requirements that banks were, putting investors' funds at serious risk" [1].
• Misrepresented the risk. He said Celsius made safe, low-risk investments and lent only to reputable entities. Instead, "investors' assets were routinely used in high-risk strategies, many of which resulted in losses that Mashinsky concealed" [1].
• Misled investors about the business. This included Celsius's safety, number of users and investment strategies [1].
• Was never registered. He failed to register as a salesperson for Celsius or as a securities and commodities dealer, as New York law requires [1].

In the federal case, as reported by CoinDesk, prosecutors said Mashinsky:

• falsely claimed Celsius had regulatory approval;
• insisted it did not make uncollateralized loans when it did;
• lied about selling his own CEL tokens while manipulating their price, making more than $48 million from CEL alone [2].

Celsius collapsed in 2022. Initial bankruptcy documents showed more than 100,000 creditors claiming combined losses of $4.7 billion [2]. The attorney general sued Mashinsky in 2023, saying he defrauded hundreds of thousands of investors, including more than 26,000 in New York [1].

"Alexander Mashinsky targeted retail investors with promises that he would keep their 'digital assets' safer than a bank, when in fact he used those assets to place risky bets and to line his own pockets," U.S. Attorney Jay Clayton said in a statement at the time of sentencing [2].

What the New York settlement requires

According to the attorney general's Oct. 9 announcement [1]:

• Lifetime ban. Mashinsky is permanently barred from doing business in the securities, commodities and cryptocurrency industries.
• $25 million trigger. He must pay New York $25 million if he fails to forfeit $10 million in ill-gotten gains to the federal government, in addition to assets already forfeited, as his plea agreement requires.
• $10 million trigger. He must pay New York $10 million if he does not serve his full prison sentence.

"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. "I will not allow scammers to use cryptocurrencies to prey on unsuspecting New Yorkers. We took action to hold Mashinsky accountable, and now we are barring him from the securities industry so he cannot take advantage of investors again" [1].

The person in this case

Alex Mashinsky, co-founder and former CEO of Celsius Network LLC

• Federal criminal case (U.S. District Court, Southern District of New York): Pleaded guilty in December 2024 to securities fraud and commodities fraud. U.S. District Judge John Koeltl sentenced him to 12 years: a 120-month sentence and a 144-month sentence, served concurrently. He agreed to forfeit $48 million and several pieces of real estate [2].
• New York civil case: Settled with the attorney general, as announced Oct. 9, 2026, on the terms above [1].
• Investor recoveries: More than $3.4 billion had been distributed to creditors in the Celsius bankruptcy as of August 2026. Separately, "Celsius founders and executives were forced to pay $16.5 million to the Federal Trade Commission," the attorney general's office said [1].

Red flags in crypto "yield" platforms

• Claims that a platform is "safer than a bank." Crypto lenders are generally not FDIC-insured or regulated like banks.
• High, steady yields on deposits, with vague explanations of where the returns come from.
• A charismatic founder who is the main source of reassurance about safety.
• Claims of regulatory approval that you can't verify with a regulator.
• A house token whose price executives promote heavily while quietly selling.

What to do if you're affected

1. Check registration of anyone selling an investment through FINRA BrokerCheck, the SEC's Investment Adviser Public Disclosure site, or your state securities regulator.
2. Report suspected crypto investment fraud to the SEC at sec.gov/tcr, the FBI at ic3.gov, and your state attorney general. New Yorkers can contact the NY AG's Investor Protection Bureau.
3. Watch out for "recovery" scams. Former Celsius customers should be wary of anyone who promises to recover lost crypto for an upfront fee. Use only official bankruptcy-claims channels.

Case status (as of Oct. 14, 2026)

Defendant	Court / agency	Status as of Oct. 14, 2026	Source
Alex Mashinsky	U.S. District Court, S.D.N.Y. (criminal)	Pleaded guilty (Dec. 2024) to securities fraud and commodities fraud; sentenced May 8, 2025, to 12 years in prison; ordered to forfeit $48 million; serving sentence; appeal waived under plea	[1], [2]
Alex Mashinsky	New York Attorney General (civil)	Settled Oct. 2026: permanent industry ban; up to $35 million owed to New York if forfeiture or full-sentence conditions are not met	[1]

Statuses can change.

Sources

1. New York State Office of the Attorney General, "Attorney General James Bans Former Cryptocurrency CEO Who Defrauded Investors from Financial Industry," Oct. 9, 2026. https://ag.ny.gov/press-release/2026/attorney-general-james-bans-former-cryptocurrency-ceo-who-defrauded-investors
2. Cheyenne Ligon, "Celsius Founder Alex Mashinsky Sentenced to 12 Years in Prison for Fraud," CoinDesk, May 8, 2025 (updated May 9, 2025). https://www.coindesk.com/policy/2025/05/08/celsius-founder-alex-mashinsky-sentenced-to-12-years-in-prison-for-fraud

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