U.S. regulators have imposed a $4.7 billion penalty on Alexander Mashinsky and permanently banned him from the crypto and financial services industries, in one of the strongest enforcement actions since the sector’s 2022 collapse.
The move by the Federal Trade Commission adds a major civil penalty to the 12-year prison sentence Mashinsky is already serving.
The figure is not arbitrary. When Celsius Network filed for bankruptcy, it owed customers roughly $4.7 billion—making the penalty a direct reflection of user losses.
A New York judge, Denise Cote, approved the order. Most of the amount is suspended. Mashinsky must pay $10 million, which can be covered through funds already tied to a separate forfeiture order.
But the suspension comes with risk.
If regulators later find he concealed assets, the full $4.7 billion could be reinstated.
“A warning shot” for crypto
Industry voices say the lifetime ban may be more consequential than the financial penalty.
Others see it as part of a broader reset for trust in digital assets.
The order goes beyond barring Mashinsky from running a crypto firm.
He is prohibited from promoting, offering, or operating any service involving deposits, investments, or asset transfers. The restriction spans both crypto and traditional finance.
He will also face reporting and compliance requirements for up to 18 years.
The collapse that shook the industry
Celsius froze withdrawals in 2022, triggering a wave of panic across crypto markets.
The company later filed for bankruptcy, revealing a major balance sheet gap. Customers were left with about $4.7 billion in claims.
Mashinsky pleaded guilty to commodities fraud—deceptive or manipulative conduct in financial markets—and to manipulating the price of the company’s CEL token, which was used to boost user returns.
In 2025, Judge John G. Koeltl sentenced him to 12 years in prison, calling the case one of the largest frauds in crypto history, as Cryptolitan reported. Efforts to recover funds for users are still underway.
A consortium backed by VanEck and GXD Labs said Tether agreed to pay nearly $300 million to resolve claims tied to the collapse.
The FTC order does not immediately increase payouts. But it preserves a claim tied to total losses and keeps pressure on any remaining assets.
What happens next
The key question is whether the suspended penalty will ever be enforced in full.
That depends on Mashinsky’s financial disclosures in the years ahead. For now, regulators have secured a penalty that mirrors the scale of the damage—and removed a central figure from the industry for good.
