WASHINGTON, D.C. — Former Celsius Network Chief Executive Officer Alexander Mashinsky and two of the cryptocurrency lender’s co-founders have agreed to pay $16.5 million and accept permanent business restrictions to settle Federal Trade Commission allegations that they misled consumers about the safety and accessibility of customer deposits.
The proposed settlements resolve claims stemming from the FTC’s 2023 lawsuit against Mashinsky, Shlomi Daniel Leon and Hanoch “Nuke” Goldstein over marketing practices preceding Celsius’ 2022 bankruptcy. The agreements were filed in the U.S. District Court for the Southern District of New York and will take effect upon court approval.
According to the FTC, Celsius falsely promoted its platform as safer than traditional banks while assuring customers their cryptocurrency deposits could be withdrawn at any time. The agency alleged the company also misrepresented that customer assets were protected by a $750 million insurance policy, maintained sufficient reserves to satisfy withdrawals and generated returns without exposing customers to risk.
The FTC further alleged Celsius advertised annual yields of up to 18% through its Earn program while falsely claiming it did not issue unsecured loans. Federal regulators contend the company continued making those representations only days before filing for bankruptcy.
Under the proposed settlements, Mashinsky will pay $10 million, Leon will pay $4.1 million and Goldstein will pay $2.4 million.
Mashinsky and Leon also agreed to permanent bans on marketing or selling products or services used to deposit, exchange, invest in or withdraw assets. Goldstein agreed to a similar prohibition covering retail cryptocurrency products and services used to buy, sell, deposit, withdraw, distribute or trade digital assets.
The orders also prohibit the three defendants from making material misrepresentations about products or services and from violating the Gramm-Leach-Bliley Act through deceptive attempts to obtain consumers’ financial information. Mashinsky and Leon are additionally barred from disclosing consumers’ nonpublic personal information without their express informed consent.
The FTC approved the settlement with Mashinsky by a 3-0 vote before former Commissioner Melissa Holyoak left the agency. The settlements with Leon and Goldstein were each approved by 2-0 votes.
The FTC’s complaint against Celsius, filed in July 2023, accused the executives of deceiving consumers about the platform’s financial condition and risk management while billions of dollars in customer assets were held by the company.
Support the local news that supports Chester County. MyChesCo delivers reliable, fact-based reporting and essential community resources—free for everyone. If you value that, click here to become a patron today.