James sued Mashinsky in 2023 over claims he misled hundreds of thousands of depositors, including more than 26,000 New Yorkers, about how safe their money was on the crypto lender. Per the attorney general’s office, the $35 million figure splits into two conditional payments. The first condition is that if Mashinsky fails to forfeit $10 million in ill-gotten gains to the federal government, on top of assets already surrendered, he will owe the state $25 million. The other $10 million that brings the total to $35 million only comes into play if Mashinsky does not serve his full prison term.

New York sets $35M penalty condition in Mashinsky’s case

Mashinsky’s federal plea already has a forfeiture order of $48,393,446, per the court stipulation filed in the case. If he forfeits that amount and completes his sentence, nothing goes to New York. So, for the state to receive any of that penalty, Mashinsky would have to default on commitments he made to avoid a longer sentence. New York is not the only state/body that has slammed Mashinsky with a form of restriction.

The Federal Trade Commission (FTC) entered a suspended $4.7 billion judgment and required Mashinsky to pay $10 million as part of the settlement. It then imposed an 18-year reporting regime while cutting him off from crypto and financial services. In June, the Commodity Futures Trading Commission (CFTC) added permanent trading and registration bans through a court consent order. Mashinsky is serving 144 months in jail, a 12-year sentence that was handed down in May 2025 after he pleaded guilty to commodities fraud and manipulating the price of Celsius’s CEL token.

Mashinsky’s book with regulators is not yet fully closed, as the lawsuit that the Securities and Exchange Commission (SEC) filed against him in July 2023 over an alleged unregistered securities offering and CEL price manipulation is still reportedly open. The agency told a federal court it had “engaged in substantive settlement discussions” with him in late May, with no agreement reached and the court granting another 60 days to keep talking.

Mashinsky may be facing another lifetime ban if the SEC settles on the same terms as the other agencies. The events that led to the series of rulings and lifetime bans started in June 2022 after Celsius froze withdrawals on its platform. A month later, it filed for Chapter 11, wiping out deposits made by users who were treating it as a savings account. Since then, creditors have received more than $3.4 billion through the bankruptcy proceeding as of August 2026. James said in a statement, “I will not allow scammers to use cryptocurrencies to prey on unsuspecting New Yorkers.”

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The documents, totaling over 400 pages, describe the emotional and financial damage customers suffered after the crypto lending platform collapsed.

Sentencing set for May as DOJ presents victim evidence

Alex Mashinsky is scheduled to be sentenced on May 8 in Manhattan federal court. In a letter dated April 23, interim US Attorney Jay Clayton informed the court that the Department of Justice had gathered the statements to highlight the scale of the harm caused by Celsius’s downfall. Mashinsky faces allegations of misleading customers and misrepresenting the company’s financial condition in the lead-up to its bankruptcy.

The victim statements were submitted to Wendy Olsen, the court’s Victim/Witness Coordinator. Many of them describe severe losses and their long-term impact on families and personal finances. Several victims accuse Mashinsky of promoting false narratives about Celsius’s health even as the company neared collapse.

Customers describe devastating losses and mistrust

Celsius operated as a platform where users could earn high yields by depositing cryptocurrencies and borrow against crypto collateral. It attracted hundreds of thousands of users, many of whom believed in the company’s promises of decentralization and financial freedom. However, in June 2022, the company froze withdrawals, blaming extreme market conditions. A month later, it filed for bankruptcy, trapping billions in user assets.

One user named Brian claimed he lost over $7 million across three Celsius accounts. He also revealed that he is now facing legal action from Celsius because he withdrew funds shortly before the platform went under. Others expressed frustration that insiders were able to pull out funds while customers were reassured that assets were safe.

Public outcry calls for maximum sentence

Many statements reflect anger and a sense of betrayal. One victim wrote that even on the day operations were halted, Celsius staff told them funds were secure. Some accused Mashinsky of creating a culture based on dishonesty and protecting insiders at the expense of retail users.

A number of letters pleaded with the court to apply the entire 30-year prison term. The victims detailed the enduring psychological and monetary distress and mentioned some victims who died by suicide because of their losses. Victims stated to the court that their struggles from Celsius’ damage will persist for numerous years among their families and themselves.

The post US Prosecutors Submit 200+ Victim Statements Ahead of Alex Mashinsky’s Sentencing in Celsius Case first appeared on Coinfea.

In a strong rebuttal to the allegations made by the NYAG, Alex Mashinsky has dismissed them as false and baseless. He maintains that the NYAG is repeating inaccurate information and drawing erroneous conclusions. Mashinsky has refuted the accusations and placed blame on external factors that were beyond his and Celsius’s control.

According to Mashinsky, Celsius’s temporary suspension of withdrawals and subsequent bankruptcy filing resulted from a liquidity crisis. He denied wrongdoing and emphasized that Celsius has always prioritized its users’ best interests and operated in good faith. He firmly maintains his innocence in the matter.

Alex Mashinsky, the CEO of Celsius Network, has responded to the accusations leveled against him by the New York Attorney General with confidence and determination. Despite the severity of the allegations, Mashinsky is resolute in his defense of himself and Celsius against what he perceives as unfounded charges.

The New York Attorney General has accused Alex Mashinsky, CEO of Celsius Network, of mishandling the company’s finances. According to the NYAG, Mashinsky’s actions led to the Celsius Network’s exposure on the FTX cryptocurrency exchange, which subsequently failed under Sam Bankman-Fried (SBF) leadership. The NYAG also alleges Mashinsky’s actions exposed the crypto lender to Do Kwon’s Terra LUNA.

Mashinsky and the company’s founders argue that Celsius could not prevent the platform’s failure. According to Mashinsky’s motion to dismiss, Celsius invested a significant amount of money into Do Kwon and Sam Bankman-Fried’s ventures that were not fraudulent at the time and could not have been anticipated to fail.

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