NY AG James secures up to $35M and permanent industry ban from Mashinsky

New York Attorney General Letitia James announced on October 9 a settlement with former Celsius Network CEO Alex Mashinsky in the state's 2023 civil fraud case, imposing up to $35 million in conditional payments and a permanent ban from the securities, commodities and cryptocurrency industries. Mashinsky is already serving a 12-year federal sentence for securities and commodities fraud; the state deal runs alongside the criminal case rather than replacing it.

What happened

The Office of the Attorney General said Mashinsky agreed to the terms to resolve its 2023 suit, which alleged he defrauded investors — including more than 26,000 New Yorkers — about the safety of Celsius deposits.

Numbers from the press release:

• Up to $35 million total, structured as two conditional payments.
• $25 million payable to New York if Mashinsky fails to forfeit a further $10 million in ill-gotten gains to the federal government, in addition to assets he has already forfeited.
• $10 million payable to New York if he does not serve his full federal prison sentence.
• Permanent ban from doing business in the securities, commodities and cryptocurrency industries.

The federal track remains in force: Mashinsky is serving a 12-year sentence imposed in May 2025 after a guilty plea on securities and commodities fraud, and he was ordered to forfeit more than $48 million. The CFTC separately imposed a permanent commodities ban earlier this year, which we covered in the CFTC consent order.

Scope of the state ban

Where the CFTC's order barred Mashinsky from commodity trading and registration, New York's ban reaches further. The AG release names the securities and cryptocurrency industries alongside commodities, which closes off the state registration and business categories that fell outside the CFTC's remit.

Impact

For Celsius creditors, the state settlement does not alter the bankruptcy distribution path. The AG release notes that as of August, Celsius customers and creditors had received more than $3.4 billion through the bankruptcy proceedings. The $35 million is paid to New York, not pooled into creditor recoveries. The conditional structure means the state collects only if Mashinsky fails to meet either the federal forfeiture or the prison term, so most of the headline number is a backstop rather than cash on the barrelhead today.

Quote

James, in the release:

I will not allow scammers to use cryptocurrencies to prey on unsuspecting New Yorkers.

What to watch

1. Whether Mashinsky's pending motion to vacate his federal sentence succeeds — reported by CoinDesk and Decrypt. If it does, the $10 million prison-term trigger kicks in; if it does not, the $10 million obligation stays dormant.
2. Whether other state AGs pursue parallel civil cases to add bans in their jurisdictions. The pattern is now in place: CFTC commodities ban, FTC crypto ban, NY state ban across three categories.
3. Whether forfeited federal assets are routed into any creditor supplementation beyond the current bankruptcy distribution.

Context

Celsius froze withdrawals in June 2022 and filed for bankruptcy a month later, locking roughly 1.7 million customers out of their accounts at the time. Three years on, the resolution has moved from the operational collapse to the enforcement perimeter around its former leadership: a federal plea and sentence, a CFTC consent order, an FTC settlement that bars Mashinsky from the crypto industry, and now a state civil settlement that stacks three industry bans and up to $35 million more in exposure.