Up to $35 million. That is what New York’s attorney general, Letitia James, said on Friday she had secured from Alex Mashinsky, the founder of the collapsed crypto lender Celsius. The words “up to” carry the weight.
The settlement has two triggers, CoinDesk reported. Mashinsky owes the state $25 million if he fails to forfeit $10 million in ill-gotten gains to the federal government. He owes a further $10 million if he does not serve his full prison sentence.
If he does both, New York collects nothing.
The ban is unconditional. Mashinsky is permanently barred from the securities, commodities and cryptocurrency industries. He is serving 12 years after pleading guilty to securities and commodities fraud, and the CFTC barred him from commodities activity in June.
James sued in 2023. She alleged he misled hundreds of thousands of investors, more than 26,000 of them New Yorkers, by promoting Celsius as safer than a bank while it put deposits into risky strategies and hid losses. Celsius froze withdrawals in June 2022 and filed for bankruptcy a month later.
The structure is the interesting part. Rather than chase a second pot of money from a man whose assets are already spoken for, the state has bolted a penalty on to his federal obligations. It works as a backstop against a missed forfeiture or a shortened sentence, not as compensation.
For depositors, the settlement adds no new money. Creditors had received more than $3.4 billion through the bankruptcy as of August, by the attorney general’s count. What share of their original claims that represents was not stated, and neither was how much Mashinsky has left to pay with.
