CFTC Settles With Celsius Founder Alex Mashinsky, Imposing Permanent Trading Ban
The Commodity Futures Trading Commission (CFTC) has concluded its 2023 enforcement action against Celsius founder Alex Mashinsky, permanently barring him from participating in markets regulated by the agency.
The consent order also includes a lifetime ban on Mashinsky’s registration with the CFTC. This resolution marks the culmination of the regulator’s inaugural case against a digital asset lending platform, as noted in its 2023 press release.
Mashinsky, who also served as CEO of Celsius, was sentenced to 12 years in prison after pleading guilty to charges of securities and commodities fraud. These charges stemmed from the collapse of his lending business, which halted withdrawals and left customers unable to access billions of dollars in deposits.
Following the withdrawal freeze, Celsius filed for bankruptcy in an attempt to salvage its operations. However, these efforts proved unsuccessful, resulting in customers losing over $5 billion.
In addition to criminal proceedings, Mashinsky faced civil lawsuits from the Securities and Exchange Commission (SEC) and the Federal Trade Commission (FTC), alongside the CFTC. Some of these allegations included claims that he misappropriated approximately $42 million from customers.
Earlier this year, the Federal Trade Commission and Mashinsky reached a settlement that reduced an initial $4.7 billion judgment to $10 million. This settlement is contingent on Mashinsky’s full and material disclosure of assets, with the judgment potentially reinstated if he fails to comply. The agreement also permanently prohibits Mashinsky from working within the cryptocurrency industry.
In May, just over a year after his sentencing, Mashinsky submitted a handwritten motion seeking to overturn his 12-year prison sentence. He cited ineffective legal counsel and a conflict of interest, alleging that his legal firm’s prior engagement with FTX co-founder and former CEO Sam Bankman-Fried, widely known as SBF, created such a conflict.
Mashinsky contends that Bankman-Fried manipulated Celsius’s native token, CEL, leading to financial harm for both his firm and its customers. Bankman-Fried is currently serving a 25-year prison sentence for fraud convictions related to the collapse of FTX. Last week, he lost an appeal to overturn his sentence and conviction.
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