New York Attorney General Letitia James has secured a $35 million penalty and a lifetime ban from securities, commodities, and cryptocurrency industries against Alex Mashinsky, former CEO of Celsius.
What Happened
Mashinsky is already serving a 12-year federal prison sentence for fraud. He settled a civil case brought by New York’s attorney general in 2023.
The case alleges he misled hundreds of thousands of investors—over 26,000 of them New Yorkers—about the safety of their Celsius deposits.
He claimed Celsius was safer than a bank. But the company used customer funds in risky strategies and hid losses. Withdrawals froze in June 2022. Bankruptcy followed a month later.
Key Facts
- Mashinsky must pay $25 million to New York if he does not return $10 million in ill-gotten gains to the federal government.
- He must pay an additional $10 million if he fails to serve his full 12-year prison sentence.
- The settlement bans him from all financial work in securities, commodities, or crypto.
- Celsius customers and creditors have received over $3.4 billion through bankruptcy proceedings as of August.
Background
Celsius marketed itself as a secure digital bank, offering interest-bearing deposits with claims of greater safety than traditional banks.
Its operations exposed customer funds to volatile crypto markets. It failed to disclose financial risks to investors.
The Commodity Futures Trading Commission already barred Mashinsky from commodities activity in June.
Why It Matters
This case shows the danger of false safety claims in crypto. It highlights the need for transparency in digital finance.
James said: I will not allow scammers to use cryptocurrencies to prey on unsuspecting New Yorkers.
Limitations
The settlement does not address broader issues in crypto lending or regulatory gaps.
It does not cover individual investor claims beyond those in bankruptcy reports.
Similar actions in other states are not confirmed.
What to Watch Next
Regulators may use this case as a model for future crypto enforcement.
Investors should stay cautious of claims about digital asset safety, especially when disclosures are limited or unclear.
For more, see the original report.
Learn more about crypto regulation in CoinDesk’s State of Crypto series.
Sources & further reading
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