Mashinsky's $35m depends on two conditions

New York Attorney General Letitia James on Friday announced a settlement with Alex Mashinsky, the founder and former chief executive of the crypto lender Celsius Network, that permanently bars him from the securities, commodities and cryptocurrency industries and carries monetary terms of up to $35m, her office said in a press release. Mashinsky is serving a 12-year federal prison sentence for fraud. The state's civil case against him ran in parallel with the criminal one.

The terms are set out in a stipulation and consent order dated and filed on Thursday 8 October in New York County Supreme Court (Index No. 450040/2023). The attorney general sued on 5 January 2023. In the stipulation Mashinsky admits violating the Martin Act and Executive Law section 63(12) through false and misleading statements to investors about Celsius's approval by regulators, and through misstatements and omissions about his own sales of the CEL token. The stipulation records that he pleaded guilty to the two criminal counts covering the same conduct.

The "up to $35m" has two parts, and each is conditional. Under the order, Mashinsky owes New York $25m in damages, but that is "deemed satisfied" if he pays $10m to the Department of Justice under the forfeiture order in his criminal case, with dollar-for-dollar credit for payments made to the DOJ after 20 May 2025. If he does not, the full $25m falls due to the state. A separate $10m monetary judgment is deemed satisfied once he completes his prison sentence. By our arithmetic, $25m plus $10m gives the $35m headline. By our reading, if he meets both conditions the state receives nothing under the order.

The sentence condition is wider than the press release suggests. The release says he must pay $10m if he does not serve his full sentence. The order says the judgment is satisfied by completing the sentence "unless" it is overturned or reduced by a court, including through his pending petition under 28 U.S.C. section 2255, or reduced by compassionate release, good-time or earned-time credits, First Step Act early release or Bureau of Prisons home confinement. Neither the order nor the release says how much of the $10m forfeiture payment Mashinsky has already made.

The ban is broad. Apart from his own personal purchases and sales, the order bars him from issuing, selling, promoting or advising on securities or commodities, "including cryptocurrency and digital assets". It also bars him from working in the industry as a broker, dealer, issuer, adviser, officer, director or consultant, from publishing or streaming trading advice, and from setting up or working for any entity that solicits investors. He must cooperate with the attorney general's office, and he may not publicly deny the order's findings, although he keeps the right to take legal positions in proceedings the office is not part of, including the section 2255 petition.

"I will not allow scammers to use cryptocurrencies to prey on unsuspecting New Yorkers," Attorney General James said in the release. The office says Mashinsky defrauded hundreds of thousands of investors, including more than 26,000 in New York. Those are the office's characterisations. The admissions in the stipulation are narrower, covering the regulatory-approval statements and the CEL sales. Neither the release nor The Block's report carries a statement from Mashinsky.

The criminal case sets the floor for the civil one. According to the stipulation, Mashinsky pleaded guilty in December 2024 to commodities fraud and to a scheme to manipulate the price of CEL, and on 8 May 2025 was sentenced to 144 months in prison, with criminal forfeiture of $48,393,446. The attorney general's office said that more than $3.4bn had been distributed to creditors in Celsius's bankruptcy as of August 2026, and that Celsius's founders and executives paid $16.5m to the Federal Trade Commission.

Other regulators have already acted. The Block reported that the FTC reached a settlement with Mashinsky in April that included a suspended $4.7bn judgment, a $10m payment, an 18-year reporting requirement and a bar on the crypto and financial services industries. On 18 June the CFTC resolved its action against him with a consent order that permanently enjoins him from further violations of certain anti-fraud provisions and imposes permanent trading and registration bans. The New York order adds a state-level bar covering the securities and commodities industries.

The order also gives the state a way to enforce its terms. It says the facts alleged in the complaint are to be taken as true in any later proceeding by the attorney general, including a nondischargeability complaint in a bankruptcy case under section 523(a)(2)(A) of the Bankruptcy Code, and gives the order collateral estoppel effect for those purposes. The headline sum depends on the outcome of the federal case; the ban and the admissions do not. Federal rule-writing for retail crypto lending and leverage is at an earlier stage, as Komposite reported in its coverage of the CFTC's leverage notice.