New York Attorney General Letitia James announced on Friday that she has reached a settlement with former Celsius CEO Alex Mashinsky, requiring him to pay up to $35 million and imposing a permanent ban on his participation in the securities, commodities, and cryptocurrency sectors.
Mashinsky, who is currently serving a 12-year prison sentence after pleading guilty to charges related to securities and commodities fraud, was accused of misleading a vast number of investors, including over 26,000 residents of New York, about the safety of their investments in Celsius.
The Celsius platform halted customer withdrawals in June 2022 and subsequently filed for bankruptcy a month later. As of August, creditors and customers have received over $3.4 billion through the ongoing bankruptcy process. The company is expected to distribute approximately $3 billion in crypto and cash to creditors when it emerges from bankruptcy in 2024, utilizing platforms such as Coinbase and PayPal for these transactions.
Under the terms of the settlement, Mashinsky is required to pay the state of New York $25 million unless he forfeits $10 million in illicit gains to the federal authorities. If he does not complete his prison term, he will owe an additional $10 million. James stated that Mashinsky had misrepresented Celsius as a safer option compared to traditional banks, while the firm engaged in high-risk strategies and obscured significant losses. "I will not allow scammers to use cryptocurrencies to prey on unsuspecting New Yorkers," she asserted.