Celsius Network was a crypto lender that stopped all withdrawals on 12 June 2022, filed for Chapter 11 bankruptcy on 13 July 2022 and came out of bankruptcy on 31 January 2024. The case is still active. On 20 July 2026 the US Federal Trade Commission (FTC) announced that co-founders Alex Mashinsky, Shlomi Daniel Leon and Hanoch "Nuke" Goldstein will pay a combined $16.5 million to settle its charges. Mashinsky is serving a 12-year prison sentence imposed on 8 May 2025. Creditors have received several rounds of payouts, the latest worth $344.4 million starting in February 2026, and the estate is still suing former customers to recover withdrawals made before the freeze.
The latest developments (2025–2026)
FTC settles with all three co-founders (20 July 2026)
The FTC says the three co-founders will pay a total of $16.5 million: Mashinsky $10 million, Leon $4.1 million and Goldstein $2.4 million. The orders were filed in the US District Court for the Southern District of New York. The orders for Mashinsky and Leon are stipulated final orders. Goldstein's is a proposed order.
All three are barred from marketing or selling products that can be used to deposit or withdraw certain assets. Mashinsky and Leon face a wider ban that also covers products used to exchange or invest assets. Goldstein is barred from retail products used to buy, sell, deposit, withdraw, distribute or trade cryptocurrency. Decrypt reported on 29 April 2026 that most of the $4.7 billion judgment against Mashinsky is suspended. It can be reinstated if he is found to have misstated his finances to the FTC.
Bankruptcy court rules on clawback damages (10 July 2026)
The Litigation Administrator, Mohsin Y. Meghji, has filed what the court calls "thousands of avoidance actions against former Celsius customers." These suits try to recover withdrawals made in the run-up to the freeze. On 10 July 2026, Chief Bankruptcy Judge Martin Glenn decided how much can be recovered from three insider entities that had defaulted: Koala1 LLC, Koala3 LLC and AM Ventures Holding, Inc.
- For assets that lost value, the estate recovers their value on the date of the transfer.
- For assets that gained value and are still held, the estate recovers the asset itself.
- For assets that gained value and were sold, the estate recovers the sale price.
The court did not decide liability or damages for the customer defendants.
In their filing, the customer defendants argued that creditors "have already recovered approximately 80% of their Allowed Claims" and that "$900 million in additional value remains to be distributed." The Litigation Administrator replied that these figures were unsupported. The court did not adopt either side's numbers, so treat the 80% figure as one party's claim.
Fourth distribution: $344.4 million (from February 2026)
According to the official distribution site run by the claims agent Stretto, a fourth distribution was announced on 22 January 2026. It is worth $344.4 million and was projected to begin in February 2026:
- about $257 million from the settlement with Tether
- $73.7 million released from the Disputed and Contingent Claims Reserve
- $9.4 million from forfeited claims
Payments go out in BTC or USD. Stretto says this is expected to be the last BTC distribution, with later ones planned in USD and stablecoins. Some creditors are held back while litigation issues are resolved, such as disputes over preference payments.
Tether settlement: $299.5 million (October 2025)
Tether agreed to pay $299.5 million to end the adversary proceeding the estate filed in August 2024. Celsius had alleged that Tether sold bitcoin collateral before a 10-hour waiting period expired in 2022. Tether denied wrongdoing. The estate had sought about $4.3 billion. Several outlets reported the settlement in October 2025, including The Block and Decrypt.
Mashinsky sentenced to 12 years (8 May 2025)
Mashinsky pleaded guilty on 3 December 2024 to commodities fraud and securities fraud. The securities count related to manipulating the price of Celsius's CEL token. On 8 May 2025, US District Judge John G. Koeltl sentenced him to 12 years in prison and three years of supervised release. He was also ordered to pay a $50,000 fine and to forfeit $48,393,446 (US Attorney's Office, SDNY). He was originally indicted on 13 July 2023 on seven counts.
How Celsius worked
Celsius took customer crypto into a program called "Earn" and paid weekly rewards on it. The FTC says it advertised rates "as high as 18 percent APY" while most participants received far less. Celsius then used the deposits for lending and trading. New Jersey's securities regulator said in September 2021 that Celsius pooled Earn deposits "to fund its lending operations and proprietary trading."
The key legal detail was in the Terms of Use. On 4 January 2023, Judge Glenn ruled that Earn deposits belonged to Celsius's bankruptcy estate, not to customers, because the terms transferred title to the company. Earn customers became general unsecured creditors. They are paid only after secured, priority and administrative claims.
What the authorities found
FTC (13 July 2023). The FTC alleged that Celsius:
- took title to and misappropriated more than $4 billion in deposits
- had made $1.2 billion in unsecured loans as of April 2022
- held only a small capital reserve
- had no system to track its assets and liabilities until mid-2021
It also alleged that Celsius falsely claimed a "$750 million insurance policy for deposits," and that the executives withdrew significant amounts of crypto about two months before the bankruptcy filing. The companies agreed to a $4.7 billion judgment. It was suspended so that remaining assets could go to customers through the bankruptcy, and the companies were permanently banned from handling consumer assets.
SEC (13 July 2023). The SEC charged Celsius Network Limited and Mashinsky with:
- an unregistered offering of the Earn Interest Program
- false statements about the safety of customer assets
- manipulating the CEL price through buybacks far larger than Celsius had disclosed
Bankruptcy examiner (January 2023). Coverage of examiner Shoba Pillay's final report says Celsius spent $558 million from 2020 onwards buying its own CEL token to support the price. It also says Mashinsky sold at least 25 million CEL tokens for at least $68.7 million between 2018 and the bankruptcy. The examiner wrote that "the business model Celsius advertised and sold to its customers was not the business that Celsius actually operated." The report did not formally classify Celsius as a Ponzi scheme.
State regulators (September 2021). On 17 September 2021, the New Jersey Bureau of Securities issued a summary cease-and-desist order. It alleged that Earn Rewards accounts were unregistered securities and ordered Celsius to stop offering them from 1 November 2021. Kentucky, Texas and Alabama took parallel action around the same time.
Where do you stand in the Celsius case?
Answer up to three questions to see which part of the Celsius bankruptcy applies to you and where to check your position.
Did you hold crypto with Celsius before it stopped all withdrawals on 12 June 2022?
Did you withdraw crypto from Celsius in the run-up to the freeze?
Were your assets in the Earn program?
- Yes → You are a general unsecured creditor
- No or not sure → Your payout depends on your claim
The distributions and avoidance actions in this case concern former Celsius customers and creditors. For you, the case works as a warning: check who owns the assets in a yield product, where the yield comes from and whether claimed insurance really exists.
The Litigation Administrator has filed thousands of avoidance actions against former customers to recover withdrawals made before the freeze. On 10 July 2026 the court set damages rules only for three defaulting insider entities and did not decide liability or damages for customer defendants. Some creditors' payouts are held back while preference disputes are resolved. Check the court docket and the official Stretto distribution site.
On 4 January 2023 Judge Glenn ruled that Earn deposits belonged to the bankruptcy estate, because the Terms of Use transferred title to Celsius. Earn customers are paid only after secured, priority and administrative claims. Payouts have come in stages, most recently the $344.4 million fourth distribution from February 2026. Check the official Stretto distribution site, not third-party claim-help sites.
How much each creditor gets depends on their claim class, the date of their claim and any pending preference dispute. Check the official Stretto distribution site and the court docket, and do not rely on third-party claim-help sites.
This sorts readers only by the categories the article describes; it does not work out anyone's claim class, recovery amount or legal exposure, and individual recovery rates are not public.
Timeline
| Date | Event |
|---|---|
| 12 Oct 2021 | Celsius raises US$400 million at a valuation above US$3 billion. It claims over $25 billion in assets and more than 1 million customers (CDPQ release) |
| 17 Sep 2021 | New Jersey cease-and-desist order on Earn Rewards accounts |
| 12 Jun 2022 | At 10:10 pm ET, Celsius pauses withdrawals, swaps and transfers, citing "extreme market conditions." CEL falls about 45% to $0.21 |
| 13 Jul 2022 | Chapter 11 filing in the Southern District of New York. More than 100,000 creditors listed, and $167 million in cash on hand reported |
| 14 Jul 2022 | Filing shows about $4.3 billion in assets against about $5.5 billion in liabilities, a gap of about $1.19 billion |
| 4 Jan 2023 | Court rules that Earn assets belong to the estate |
| 13 Jul 2023 | DOJ indictment of Mashinsky, FTC settlement with the companies, SEC charges |
| 31 Jan 2024 | Celsius exits Chapter 11 and begins distributing more than $3 billion. Bitcoin miner Ionic Digital is created for creditors |
| 3 Dec 2024 | Mashinsky pleads guilty |
| 8 May 2025 | Mashinsky sentenced to 12 years |
| Oct 2025 | Tether settlement for $299.5 million |
| Feb 2026 | Fourth distribution of $344.4 million begins |
| 10 Jul 2026 | Court sets damages rules for the defaulting insider defendants |
| 20 Jul 2026 | FTC announces $16.5 million in settlements with the three co-founders |
What happened to customer money
Payouts have come in stages. At its exit on 31 January 2024, Celsius said it was distributing more than $3 billion in crypto and cash. It also said creditors would own Ionic Digital, a new company holding Celsius's bitcoin mining assets and run by Hut 8 under a four-year management agreement. Later distributions come from litigation recoveries and from claims released from reserve, such as the $344.4 million round in 2026.
How much each creditor gets depends on their claim class, the date of their claim and any pending preference dispute. If you are a creditor, check the official Stretto distribution site and the court docket. Do not rely on third-party "claim help" sites.
What the case shows about yield products
- Read who owns the assets. If the terms transfer title to the platform, a court may treat you as an unsecured creditor in a bankruptcy, as happened to Earn customers in January 2023.
- Ask where the yield comes from. The FTC found advertised rates of up to 18% while most users received much less, and the examiner found the advertised business differed from the real one.
- Check insurance claims yourself. The FTC says the advertised $750 million deposit policy did not exist.
- Treat regulatory orders as warnings. New Jersey's order came about nine months before the freeze.
- Withdrawals can be clawed back. Taking money out before a collapse does not always end your exposure, as the thousands of avoidance actions show.
Limitations: the figures come from regulators, court records, the claims agent and press reports up to October 2026; individual recovery rates are not public and are not estimated here. This article is not investment advice.
