On January 5, 2023, the state of New York and its attorney general, Letitia James, filed a lawsuit against Alex Mashinsky, the former CEO of Celsius, alleging that he lied to people about the risks of investing in Celsius, hid its deteriorating financial condition, and failed to register in New York.

Letitia James wrote in Twitter:

"Alex Mashinsky lied to people about the risks of investing in Celsius, hid its deteriorating financial condition, and failed to register in New York. Mashinsky tricked hardworking people into investing their life savings into Celsius, promising big financial returns and claiming the platform was safer than a bank. Instead, Celsius collapsed and New Yorkers were left in financial ruin. I'm suing to get New Yorkers their money back and ban Mashinsky from doing business in New York."

James also stated that Mashinsky tricked individuals into investing their life savings into the platform, promising big financial returns and claiming that it was safer than a bank, ultimately leading to its collapse and leaving New Yorkers in financial ruin. The lawsuit aims to get money back for the approximately 26,000 affected New Yorkers and ban Mashinsky from doing business in the state.

Additionally, a recent ruling by a bankruptcy judge in New York stated that Celsius Network owns most of the cryptocurrency deposited by its customers, meaning that most of these individuals will be at the end of the line for repayment in the company's bankruptcy, which affects around 600,000 accounts holding assets worth $4.2 billion.