CFTC bans Mashinsky from trading for life, closing the regulator’s first crypto-lender case

The Commodity Futures Trading Commission permanently banned Celsius founder Alex Mashinsky from commodity trading and CFTC registration through a consent order entered on June 18 in the US District Court for the Southern District of New York. The order concludes the agency’s July 2023 fraud case and ends what the CFTC has referred to as its first crypto-lending enforcement action.

The ban prohibits Mashinsky from trading any CFTC-regulated commodity, soliciting customer funds for commodity transactions, applying for CFTC registration, and working in any senior or operational role at a CFTC-registered firm. Mashinsky did not contest the order.

Celsius itself settled with the regulator through a permanent injunction two days after the July 2023 complaint, making Mashinsky the only remaining defendant in the matter.

Four federal regulators have now hit Mashinsky for the same conduct

This CFTC ruling builds upon three other federal rulings, thus becoming the first and only crypto executive to be permanently banned by four federal regulators for one series of actions. In May 2025, Mashinsky was sentenced to 12 years in federal prison by Judge John G. Koeltl in the Southern District of New York.

He had pleaded guilty in December 2024 to commodities fraud and securities fraud charges. The May 2025 sentence also imposed a $50,000 fine and ordered him to forfeit about $48.4 million.

As Cryptopolitan reported in April, the Federal Trade Commission then secured a $4.72 billion civil judgment, an amount designed to track the customer losses from the Celsius collapse. Mashinsky must pay $10 million up front, with the remaining balance suspended on condition he keeps accurate financial disclosures.

The FTC order also imposed a lifetime ban on marketing, advertising, or offering any consumer product involving the deposit, exchange, investment, or custody of assets.

The civil lawsuit filed by the Securities and Exchange Commission (SEC) is ongoing. The SEC alleges that Mashinsky and Celsius have conducted an unregistered securities offering using the Earn program, defrauded customers of the financial health of Celsius, and manipulated the price of CEL tokens. It seeks permanent bars from serving as an officer or director of any corporation and participating in cryptocurrency offerings.

In addition to the CFTC, FTC, and DOJ cases, this action by the SEC is considered to be one of the most coordinated responses to an individual crypto entrepreneur since Sam Bankman-Fried of FTX.

The CFTC complaint detailed how Celsius deployed $20 billion in deposits

On July 13, 2023, the CFTC initiated its lawsuit against Celsius and its CEO Michael Mashinsky. According to the CFTC complaint, from 2018 up until at least June 2022, Mashinsky had been promoting Celsius through video, writing, livestreams, and social media as a safe destination for depositing cryptocurrencies and earning weekly yields.

Behind that messaging, the regulator said, Celsius pooled customer deposits and channeled them through uncollateralized lending and volatile DeFi positions to fund the yields it had promised users. The lending platform took in roughly $20 billion in customer assets before the collapse.

When crypto markets turned in mid-2022, those positions unwound. Celsius suspended withdrawals on June 12, 2022 and filed for Chapter 11 bankruptcy on July 13, 2022. Customers lost approximately $4.7 billion in the collapse, the figure that ultimately anchored both the FTC judgment and the criminal forfeiture order.

Bankruptcy proceedings under reorganized Celsius CEO Chris Ferraro have returned about 64.9% of what creditors are owed, with Tether agreeing in 2025 to pay close to $300 million through a VanEck and GXD Labs consortium that bought claims linked to the bankruptcy.

Mashinsky is trying to vacate his sentence by blaming Sam Bankman-Fried

In May 2026, Mashinsky filed a handwritten motion under 28 U.S.C. § 2255 seeking to vacate his 12-year sentence. Mashinsky argues his trial counsel had a disqualifying conflict (they were also representing FTX founder Sam Bankman-Fried) and that the conflict kept them from pursuing his theory that Bankman-Fried manipulated CEL token prices and accelerated Celsius’s collapse. He claims the alleged conflict and his lawyers’ financial distress deprived him of effective representation at the plea stage.

Ineffective-assistance-of-counsel claims rarely succeed after a guilty plea. Federal courts require defendants to prove both that a conflict existed and that it materially altered the case outcome. Mashinsky’s appeal would need to satisfy both prongs to disturb the sentence Judge Koeltl handed down. Until that motion is decided, Mashinsky is scheduled for release no earlier than 2037, with all four federal bans in place.