Celsius Founders Settle FTC Charges for $16.5M

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Celsius Founders Hit With $16.5M FTC Settlement

The fallout from Celsius Network's collapse continues, with three of the company's co-founders agreeing to pay a combined $16.5 million to settle charges brought by the U.S. Federal Trade Commission (FTC).

The settlement marks another chapter in one of crypto's most high-profile failures, reinforcing regulators' focus on holding executives personally accountable for misleading investors.

The FTC's Case

According to the FTC, Celsius founders Alex Mashinsky, Shlomi Daniel Leon, and Hanoch Goldstein misled customers by repeatedly portraying the platform as a safe place to store digital assets.

The agency alleged that Celsius marketed itself as being safer than a traditional bank, claimed it maintained a $750 million insurance policy to protect deposits, and assured customers that it had sufficient reserves to honor withdrawals at any time. It also promoted its popular Earn product with promises of returns of up to 18% annually.

Regulators say those claims were simply not true.

Perhaps most strikingly, the FTC alleges the founders continued making reassuring public statements even as the company's financial position rapidly deteriorated.

Just days before Celsius froze customer withdrawals and filed for bankruptcy in 2022, Mashinsky publicly insisted the platform had "billions in liquidity" and could provide customers with immediate access to their funds. Three days later, withdrawals were suspended, with the company citing extreme market conditions before entering bankruptcy.

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Personal Penalties and Industry Bans

As part of the settlement, the three executives will pay significant financial penalties:

• Alex Mashinsky: $10 million

• Shlomi Daniel Leon: $4.1 million

• Hanoch Goldstein: $2.4 million

Beyond the monetary penalties, each executive also faces restrictions on future involvement in the crypto industry.

Mashinsky and Leon are permanently banned from marketing or selling products that allow users to deposit, exchange, invest, or withdraw assets. Goldstein faces a narrower ban preventing him from marketing or selling products related to buying, selling, or trading cryptocurrencies.

Mashinsky and Leon must also refrain from sharing consumers' nonpublic personal information unless users provide explicit informed consent.

A Long Road Since Celsius' Collapse

Founded in 2017, Celsius quickly became one of the largest crypto lending platforms by promising attractive yields and positioning itself as a safer alternative to traditional financial institutions.

That narrative unraveled dramatically during the 2022 crypto market downturn, when the company froze customer withdrawals before filing for bankruptcy, leaving thousands of users unable to access billions of dollars in assets.

Since then, legal pressure on the company's leadership has steadily intensified.

Mashinsky pleaded guilty in 2024 to commodities fraud and market manipulation charges tied to the Celsius token. He was later sentenced to 12 years in prison and is currently serving his sentence at the Otisville Correctional Facility in New York.

Last month, Mashinsky sought to overturn his conviction, arguing that he received ineffective legal representation. His filing also invoked the legal doctrine known as the "fruit of the poisonous tree," which generally argues that evidence obtained through unlawful means should not be admissible in court.

Why It Matters

The FTC's settlement sends a clear message that regulators are increasingly willing to pursue individual executives, not just companies, for misleading investors.

As crypto regulation continues to evolve, enforcement actions are shifting beyond corporate fines toward personal accountability, permanent industry bans, and significant financial penalties.

For crypto founders and fintech leaders alike, the Celsius saga serves as a reminder that bold marketing claims about safety, liquidity, and investment returns are likely to face intense regulatory scrutiny, especially when they fail to match reality.