Celsius CEO Alex Mashinsky Leaves Empty-Handed: Court Seizes All Bankruptcy Claims

Another crypto king dethroned—this time with zero parachute. Alex Mashinsky, the embattled former Celsius CEO, just got a judicial haircut sharper than his platform’s infamous yield cuts.

The verdict? Total forfeiture. Every last bankruptcy claim wiped from his ledger.

No golden parachute. No backdoor exit. Just the cold reality of accountability in an industry that’s finally facing its reckoning.

Meanwhile, creditors are left picking through the rubble of what was once a $20B empire. Maybe next time they’ll remember: in crypto, even the house doesn’t always win.

TLDR

• Former Celsius CEO Alex Mashinsky has forfeited all claims to bankruptcy assets, ensuring more funds go to creditors instead
• Mashinsky was sentenced to 12 years in prison in May for fraud related to Celsius’ collapse
• Celsius has paid out over $2.5 billion to more than 251,000 creditors since filing for bankruptcy in July 2022
• An additional $127 million was distributed to creditors in November 2024 from a litigation recovery account
• The court agreement prevents Mashinsky and three related entities from receiving any bankruptcy proceeds

The United States Bankruptcy Court for the Southern District of New York has finalized an agreement that prevents former Celsius CEO Alex Mashinsky from claiming any assets from the company’s bankruptcy proceedings. The decision ensures that more funds will be available for distribution to creditors who lost money when the crypto lending platform collapsed.

Mashinsky and three related entities – AM Ventures Holdings Inc., Koala1 LLC, and Koala3 LLC – have agreed to forfeit all claims to Celsius’ bankruptcy estate. The court filing from Monday states that this agreement allows Celsius debtors to distribute funds that were previously tied up due to claims made by these parties.

The former CEO was sentenced to 12 years in prison in May after being found guilty of fraud charges. His legal team had requested a more lenient sentence, citing his military service and guilty plea in December as mitigating factors.

The US Department of Justice had initially sought a 20-year prison sentence for Mashinsky. His lawyers argued that such a sentence WOULD effectively be a “death-in-prison sentence” given his age and circumstances.

Creditor Payments Continue

Celsius has made substantial progress in returning funds to creditors since filing for Chapter 11 bankruptcy in July 2022. The platform has paid out more than $2.5 billion to over 251,000 creditors as of August 2024.

However, approximately 121,000 creditors did not file claims for their losses. Most of these unclaimed amounts were less than $1,000, with the majority of these creditors losing less than $100.

The company distributed an additional $127 million to creditors in November 2024 from its “Litigation Recovery Account.” This payout benefited retail borrowers, retail depositors, and users of Celsius’ Earn program.

Creditors have collectively claimed more than $1 billion in assets throughout 2024. The bankruptcy proceedings have allowed for systematic distribution of recovered funds to those who lost money on the platform.

Bankruptcy Process Details

Celsius reached two settlements in July 2023 to exit Chapter 11 bankruptcy proceedings. Chapter 11 bankruptcy allows businesses to restructure their debts without facing immediate action from creditors.

The court has retained jurisdiction over all matters relating to this case. However, the bankruptcy proceedings will not interfere with Mashinsky’s ongoing criminal case.

The agreement specifically states that “The Court shall have exclusive jurisdiction to resolve any and all disputes related to this Stipulation and Order.” This ensures that any future disputes regarding the bankruptcy distribution will be handled through the bankruptcy court system.

The bankruptcy process began in July 2022 when Celsius filed for Chapter 11 protection. The crypto lending platform had frozen customer withdrawals weeks earlier, citing extreme market conditions and regulatory uncertainty.