Ex-Celsius CEO Alex Mashinsky Defrauded Hundreds of Thousands of Investors Out of Billions of Dollars in Cryptocurrency
New York Attorney General Letitia James announced that she has secured up to $35 million from Alex Mashinsky, a co-founder and former CEO of cryptocurrency lending platform Celsius Network LLC (Celsius), as well as a permanent ban on his participation in the securities, commodities, and cryptocurrency industries. Attorney General James sued Mashinsky in 2023 for defrauding hundreds of thousands of investors, including more than 26,000 in New York, by misleading them about Celsius’ safety to encourage them to deposit billions of dollars in digital assets onto his platform. Celsius lost hundreds of millions of dollars on risky investments, which Mashinsky attempted to hide from investors. Mashinsky also failed to register as a salesperson for Celsius and as a securities and commodities dealer, in violation of New York law. The eventual collapse of Celsius left many investors in financial ruin.
As a result of Attorney General James’ lawsuit, Mashinsky will be permanently barred from doing business in the securities, commodities, and cryptocurrency industries. Mashinsky is currently serving a 12-year prison sentence resulting from a parallel federal criminal case. In that case, Mashinsky was also ordered to forfeit more than $48 million to the federal government, and his investors and creditors have received more than $3.4 billion in a Celsius bankruptcy proceeding.
“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,” said Attorney General James. “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.”
Celsius was a cryptocurrency lending platform where investors could deposit their cryptocurrency in return for promises of high yields on their digital assets. Mashinsky was Celsius’ public face, appearing regularly in interviews, at public events, and on social media to promote the platform and recruit investors. An investigation by the Office of the Attorney General (OAG) found that Mashinsky deceived investors about Celsius’s safety, number of users, and investment strategies, and repeatedly claimed that Celsius was safer than a bank. In reality, Celsius was not subject to the strict federal or state requirements that banks were, putting investors’ funds at serious risk. Mashinsky repeatedly claimed that Celsius made safe, low-risk investments and only lent assets to credible and reputable entities. However, investors’ assets were routinely used in high-risk strategies, many of which resulted in losses that Mashinsky concealed. The collapse of Celsius left many individuals financially devastated. One New York resident mortgaged two properties to invest with Celsius. A disabled veteran lost his investment of $36,000, which had taken him nearly a decade to save up.
Mashinsky is currently serving 12 years in federal prison as part of a federal plea agreement. Under a settlement with OAG, Mashinsky must pay $25 million to New York if he fails to forfeit $10 million in ill-gotten gains to the federal government, in addition to already forfeited assets, as part of his federal plea agreement. Mashinsky must also pay $10 million to New York if he does not serve his full prison sentence, as mandated by the criminal court and overseen by the Bureau of Prisons.
In addition, over $3.4 billion has been distributed to creditors in the company’s bankruptcy as of August of 2026. Separately, Celsius founders and executives were forced to pay $16.5 million to the Federal Trade Commission.
Attorney General James also encourages workers in the cryptocurrency industry who may have witnessed misconduct or fraud to file a whistleblower complaint with her office, which can be done anonymously.
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