Celsius Co-Founders Face $6.5M Penalties and Permanent Crypto Industry Ban in FTC Case

Key Points

• Shlomi Daniel Leon and Hanoch “Nuke” Goldstein, co-founders of Celsius, will collectively pay $6.5 million in FTC settlements
• Settlement breakdown: Leon contributes $4.1 million while Goldstein pays $2.4 million through separate judicial orders
• Federal regulators alleged Celsius misrepresented deposit safety and insurance protections to customers
• Combined with ex-CEO Alex Mashinsky’s prior $10 million settlement from April, the three co-founders have paid $16.5 million total
• Leon and Goldstein face permanent prohibitions on promoting or distributing cryptocurrency-related offerings

Former Celsius Network co-founders have reached a $6.5 million combined settlement with federal regulators to resolve fraud allegations. The Federal Trade Commission announced the resolution involving Shlomi Daniel Leon and Hanoch “Nuke” Goldstein after the cryptocurrency lending platform’s spectacular 2022 failure.

Leon, who held the position of chief strategy officer at Celsius, agreed to a $4.1 million payment through a court order issued by U.S. District Judge Denise Cote on June 29. While a substantially larger judgment of $4.72 billion was also imposed, the bulk remains suspended contingent on his adherence to settlement obligations.

Meanwhile, Goldstein, the company’s former chief technology officer, committed to a $2.4 million payment via an order signed this Monday. His settlement includes an identical suspended judgment framework dependent on fulfilling compliance requirements.

Federal Allegations Against Celsius

The FTC initiated legal proceedings against Celsius and its leadership team in July 2023. Regulators charged the organization with positioning itself as a more secure alternative to conventional banking institutions while simultaneously making misleading statements regarding reserve holdings and insurance protections.

Celsius assured depositors of unrestricted withdrawal access at any moment. The platform additionally promoted possession of a $750 million insurance policy protecting customer funds and maintained it avoided issuing unsecured loans.

Federal authorities disputed these representations. The FTC determined that Celsius had extended $1.2 billion in unsecured lending by April 2022 and never possessed the advertised insurance coverage.

The commission further alleged that company leadership maintained reassuring communications with clients even as insolvency approached. According to the FTC, executives “continued to claim that customers’ deposits were safe days before the company filed for bankruptcy.”

The platform halted all withdrawals in June 2022 before declaring bankruptcy the subsequent month. During its zenith, Celsius managed approximately $25 billion in customer assets. Following its collapse, depositors found themselves unable to retrieve roughly $4.7 billion in trapped funds.

Mashinsky’s Legal Consequences and Prison Term

These recent settlements complement the FTC’s April resolution with former Celsius CEO Alex Mashinsky. He consented to a $10 million payment alongside a lifetime prohibition from endorsing asset-related financial products.

The trio of co-founders have collectively remitted $16.5 million through their FTC agreements. Each individual payment applies toward satisfying the $4.72 billion judgment associated with alleged consumer damages calculated by federal regulators.

Mashinsky additionally received a lifetime trading prohibition from the Commodity Futures Trading Commission through a distinct civil enforcement proceeding. In May 2025, a federal court sentenced him to 12 years’ imprisonment following guilty pleas to commodities fraud and securities fraud charges. The judgment mandated forfeiture exceeding $48 million.

Ongoing Customer Reimbursement Efforts

The bankruptcy proceedings for Celsius depositors have progressed independently. The company initiated a third distribution phase totaling approximately $220.6 million to creditors in August 2025, elevating cumulative recoveries to nearly 65% of qualifying claims at that juncture.

Following the entry of Leon and Goldstein’s court orders, the FTC has successfully resolved cases against all three Celsius co-founders identified in its 2023 complaint.

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