Alex Mashinsky, once one of crypto's most popular banking figures, was fined $10mn this week and permanently banned from the industry under a settlement with the Federal Trade Commission (FTC), marking the final chapter in the rise and fall of Celsius Network.
From Crypto Banking Giant to Lifetime Ban: How Alex Mashinsky and Celsius Collapsed
2 May 2026 - 00:23 CEST
By Jona Jaupi
The order, filed in a New York federal court on 28 Apr, includes a $4.7bn judgment tied to losses from Celsius' 2022 collapse. Most of that amount is suspended, leaving Mashinsky on the hook for $10mn unless officials later find he hid assets. The settlement follows a case first brought by the FTC in 2023.
The fine and ban mark the end of a stunning fall for the founder of Celsius, which was once one of the biggest crypto lenders before a market downturn revealed it lacked sufficient assets to completely repay customer funds.
Celsius collapse: What happened?
Celsius Network was founded in 2017 and grew quickly by offering high returns on crypto deposits, sometimes as much as 18%.
The company used those funds to make loans, invest in decentralized finance (DeFi), and take its own market positions – a model that worked while crypto prices were rising. At its peak, the platform said it had around 1.7mn users and held more than $20bn in assets.
However, in 2022, the market experienced a sharp downturn, in part due to the Terra blockchain collapse in May of that year, which wiped out tens of billions of dollars in market cap when its stablecoin, TerraUSD, lost its one-to-one peg to the US dollar.
The broader market downturn led to Celsius losing some of its investments. This prompted users to quickly seek to withdraw their funds, except Celsius didn't have enough cash to meet those withdrawals.
On 13 June, Celsius froze all accounts, citing "extreme market conditions." The move shook the crypto market and left customers unsure if they would get their money back.
Shortly after, in July, the company filed for bankruptcy, revealing a $1.2bn gap between what it owed and what it had.
Yield-driven risks
The promise of high yields was central to Celsius' rise – and to the risks that led to its collapse.
Questions were being raised at the time about how those returns were being generated. Experts warned the company may have been taking on too much risk with customer funds. And unlike banks, Celsius operated without insurance, capital requirements or clear oversight, the New York Times reported in 2022.
At the same time, Mashinsky continued to push the platform as safe. In public appearances and social media posts, he dismissed concerns and focused only on its high returns.
Mashinksy's resignation and arrest
Mashinsky stepped down as chief executive of Celsius Network in September 2022. In January 2023, the New York Attorney General at the time, Letitia James, sued Mashinsky.
James accused Mashinsky of defrauding millions by promoting Celsius as a safe place to store crypto. The lawsuit aimed at preventing Mashinsky from doing business in New York and paying damages.
Federal prosecutors later charged him with fraud, saying that Mashinsky misled customers about the company's financial health and used their assets to make risky bets.
He also withdrew about $8mn of his own assets shortly before Celsius froze customer withdrawals, according to a filing by the Department of Justice.
Prosecutors said at the time that he also manipulated the price of Celsius' native token, CEL, by spending hundreds of millions to buy its value while selling his own holdings – he alleged made around $48mn from those sales.
In December 2024, Mashinsky pleaded guilty to fraud before US District Judge John G. Koeltl and was sentenced to 12 years in prison in 2025.
"Alexander Mashinsky targeted retail investors with promises that he would keep their 'digital assets' safer than a bank, when in fact he used those assets to place risky bets and to line his own pockets," US Attorney Jay Clayton said at the time. "In the end, Mashinsky made tens of millions of dollars while his customers lost billions. "
The aftermath
The collapse left millions of investors locked out of their funds. In bankruptcy filings, the company reported $4.3bn in assets against $5.5bn in liabilities, including $4.7bn owed to customers.
Many investors only recovered part of their funds. In court letters, some described losing life savings. Under the FTC settlement, Mashinsky is permanently banned from working with customer funds, essentially keeping him out of crypto and other financial services.
The Celsius collapse has become a textbook example of high-risk lending and a cautionary tale for the crypto industry.
