Celsius founders barred from marketing crypto, $16.5M order

A federal court has entered permanent orders that bar three former Celsius executives from marketing or offering broad cryptocurrency and asset-services products and impose roughly $16.5 million in combined monetary obligations that may be offset by Justice Department forfeiture or bankruptcy credits.

The orders, enforced by the Federal Trade Commission, apply to Alexander Mashinsky, Shlomi Daniel Leon and Goldstein. They prevent the men from advertising, promoting, offering or distributing products or services used to deposit, exchange, invest, withdraw or trade assets. The bans cover conduct whether the individuals act directly or through intermediaries and extend to assisting others who provide those services.

Goldstein’s order is limited to retail cryptocurrency products. Mashinsky’s order covers assets generally. Leon’s order explicitly covers cryptocurrency, banking and other financial assets.

Each order bars making material misrepresentations about products and services. The orders forbid obtaining or attempting to obtain customer information from financial institutions through false, fictitious or fraudulent representations. The text lists specific examples of protected data that cannot be sought by deception, including bank-account details, login credentials, private keys and wallet information.

Mashinsky and Leon must obtain express informed consent before disclosing consumers’ nonpublic personal information. All three men face multi-year reporting and recordkeeping requirements intended to give regulators documentation for compliance and enforcement.

The FTC put the combined monetary obligations at roughly $16.5 million. Mashinsky’s order lists a $10 million obligation that can be satisfied through qualifying Justice Department forfeiture. Leon’s obligation is about $4.1 million, and Goldstein’s order lists $2.014 million. Court documents state that payments already made through DOJ forfeiture actions and settlements in Celsius’s bankruptcy adversary proceedings can count toward those obligations, so the sums may not represent new cash transfers to the agency.

Funds the FTC collects may be used for consumer redress; any amounts not used for relief would be deposited in the U.S. Treasury.

The orders reflect allegations the FTC made in its 2023 complaint against Celsius. The agency has said the company marketed itself as safer than a bank, promised customers they could withdraw funds at any time, and advertised yields as high as 18.63% APY. The complaint also alleged Celsius told customers it had sufficient reserves on June 7, 2022, five days before the company froze withdrawals and transfers. Celsius filed for bankruptcy on July 13, 2022.

The court orders extend beyond the men’s roles at Celsius, covering future work performed personally or through third parties and giving regulators explicit grounds to pursue enforcement if the individuals make misleading statements, improperly handle consumer data, or assist others in offering the barred services.