Three co-founders of bankrupt crypto lender Celsius are now subject to permanent court injunctions that bar them from broad segments of the crypto and asset-services business.
The Federal Trade Commission set their combined monetary obligation at $16.5 million, although Goldstein’s judgment lists $2.014 million. Based on the source material, qualifying amounts can be credited through earlier Department of Justice forfeitures and payments or waivers from Celsius bankruptcy settlements, so the total may not require additional cash payment.
Orders cover deposits, exchanges, investing, withdrawals, and trading
Alexander Mashinsky and Shlomi Daniel Leon are barred from advertising, marketing, promoting, offering, or distributing products or services used to deposit, exchange, invest, or withdraw assets. They also cannot assist those activities.
Mashinsky’s order covers assets generally. Leon’s order specifically covers crypto, banking, and financial assets. In both cases, the restrictions apply whether they act directly or through intermediaries.
Goldstein’s injunction is focused on retail crypto business. He cannot advertise, market, promote, or sell retail products or services used to buy, sell, deposit, withdraw, distribute, or trade cryptocurrencies, and he also cannot assist related sales or marketing.
False statements and access to sensitive customer data are also barred
All three injunctions prohibit material misrepresentations about products and services.
They also bar false, fictitious, or fraudulent statements used to obtain, or attempt to obtain, customer information from financial institutions, including bank account details, login credentials, private keys, and wallet information.
Mashinsky and Leon must also obtain express informed consent before disclosing consumers’ nonpublic personal information.
Restrictions align with the FTC’s 2023 complaint
The limits match conduct alleged by the FTC in its 2023 complaint. The agency said Celsius was marketed as safer than banks, promised withdrawals at any time, and promoted yields of as much as 18.63%.
The FTC also alleged that Celsius said on June 7, 2022 that it had sufficient reserves, then froze withdrawals and transfers five days later. Celsius filed for bankruptcy on July 13, 2022.
The injunctions follow the founders, not just the company
These orders extend beyond Celsius itself and apply to the founders personally. They also cover assistance provided to others. For Mashinsky and Leon, the restrictions explicitly reach work done through intermediaries.
For the next several years, the founders must submit reports and preserve records, giving the FTC a trail to monitor compliance and giving the court a basis to enforce the injunctions.
$16.5 million obligation can be offset by prior forfeitures and bankruptcy-related payments
The source says payments made through DOJ forfeitures and Celsius bankruptcy settlements can be counted toward the $16.5 million obligation.
Mashinsky’s $10 million obligation can be satisfied through qualifying DOJ forfeitures. Leon’s $4.1 million obligation and Goldstein’s $2.014 million amount can be offset through payments or waivers in Celsius bankruptcy litigation.
The legal tracks are separate but overlap economically, according to the source material, which means the injunctions do not guarantee additional recovery for Celsius creditors.
If the FTC receives funds, they may be used for consumer redress or related relief. Any amount not used for relief would be deposited into the U.S. Treasury.