Judge Says Alex Mashinsky Won’t See a Dime from Celsius Bankruptcy

A U.S. Bankruptcy Court has barred former Celsius CEO Alex Mashinsky, along with three of his connected companies, from receiving any funds from the company's bankruptcy proceedings. The ruling prioritizes restitution for defrauded customers.

The blocked companies are AM Ventures Holdings Inc., Koala1 LLC, and Koala3 LLC. Under the agreement, neither Mashinsky nor these entities can claim any share of the assets being distributed to creditors.

The court decision allows Celsius to release funds that were previously set aside for potential claims by Mashinsky and his companies. The bankruptcy court will keep authority over any disputes related to this agreement but will not interfere with Mashinsky's ongoing criminal case.

This civil ruling follows Mashinsky's criminal conviction. In May, a federal judge sentenced him to 12 years in prison for fraud. The court found him guilty of misleading customers about the safety of customer deposits and valued tokens. His lawyers asked for a lighter sentence, pointing to his military service and his guilty plea in December 2024. Prosecutors wanted a 30-year sentence.

Related: Celsius: SEC Darling to Debt Abyss!

Celsius Network filed for bankruptcy protection in July 2022 after freezing customer withdrawals, leaving users unable to access more than $20 billion in assets. Since filing for bankruptcy, the company paid out over $2.5 billion to more than 251,000 creditors. The company also recovered $127 million through legal actions.

In the current calendar year alone, creditors have filed claims totalling more than $1 billion in assets. However, about 121,000 small creditors have not yet filed claims due to minimum amount requirements. The new agreement ensures that paying back defrauded customers stays the main focus of the bankruptcy process.