Celsius Founder Banned From CFTC Markets

Celsius Founder Banned from CFTC Markets

Alexander Mashinsky, the founder and former CEO of Celsius, has been permanently barred from trading in markets regulated by the U.S. Commodity Futures Trading Commission (CFTC). This action follows a federal court’s approval of a consent order that resolves the regulator’s 2023 enforcement case against him.

The order, issued by the U.S. District Court for the Southern District of New York, also permanently prohibits Mashinsky from violating specific anti-fraud provisions of the Commodity Exchange Act and CFTC regulations. Furthermore, he is barred from future registration with the agency.

The CFTC initiated its lawsuit against Mashinsky and Celsius Network in July 2023. The regulator alleged that Celsius operated a digital asset platform where customer cryptocurrencies were pooled and used to generate revenue, with customers promised weekly interest payments or rewards.

According to the complaint, Mashinsky and Celsius misled hundreds of thousands of customers between 2018 and at least June 2022 by making false or misleading statements regarding the platform’s security, profitability, and regulatory status.

The CFTC contended that Mashinsky actively promoted Celsius through various channels, including public videos, livestreams, blog posts, social media, and the company’s website. In these communications, he reportedly presented Celsius as a secure repository for digital assets, drawing comparisons to traditional banking while also highlighting high-yield returns for customers.

However, the CFTC asserted that Celsius engaged in increasingly risky investment strategies to fulfill its promised returns. These strategies allegedly included extending millions of dollars in uncollateralized loans and participating in unregulated decentralized finance agreements. While customers were assured their assets were safe and generating returns, the company was reportedly incurring significant losses.

The complaint detailed that customer funds were not as secure as Celsius had claimed, ultimately leading the company to file for bankruptcy. The CFTC stated that Celsius handled approximately $20 billion in customer funds during its operations. In July 2023, a separate consent order was entered against Celsius itself, leaving Mashinsky as the sole remaining defendant in the CFTC’s civil action.

The CFTC’s case was distinct from, though related to, a criminal case brought by federal prosecutors in New York on July 11, 2023, concerning the same alleged actions by Mashinsky. Mashinsky subsequently pleaded guilty on December 3, 2024, to one count of commodities fraud and one count of securities fraud.

He was sentenced on May 8, 2025, to 12 years in prison and ordered to pay a $50,000 fine. The court also mandated that he forfeit $48.39 million for his involvement in the commodities and securities fraud committed at Celsius.