Celsius creditors allege Wintermute facilitated ‘wash trading’: Report

It was alleged that Celsius executives purportedly involved Wintermute to facilitate “wash trading” in an effort to “fraudulently” manipulate trading volumes on the Celsius platform.

Creditors of bankrupt cryptocurrency lending platform Celsius have alleged that crypto market maker, Wintermute, assisted Celsius executives in manipulating the price of CEL (CEL) through the use of “wash trading.”

According to a June 23 Bloomberg report, which cited a recent court filing, Celsius creditors have recently amended their lawsuit in the United States District Court of New Jersey to allege that Wintermute was engaged by Celsius executives to conduct improper market trading.

Wintermute, described as a “purported market maker in the crypto industry,” allegedly aided Celsius Network’s CEO, Alex Mashinsky, and other executives to “unlawfully manipulate and profit from the illegal wash trading of unregistered CEL Tokens.”

The creditors alleged that both, the Celsius executives, and Wintermute, acted with “scienter in connection with the manipulative acts alleged.” 

“Defendant Wintermute and the Executive Defendants engaged in a scheme that artificially inflated the trading volume of the CEL tokens sold and marketed by Celsius.”

According to the filing, the alleged scheme was uncovered through “publicly available internal conversations” between Celsius executives.

It was further claimed that Celsius executives engaged Wintermute to be involved in these “improper market making” activities from around March 2021 up “until the Celsius froze withdrawals in June 2022.”

It was reported that Celsius had no measures in place to prevent improper market making.

“The supposed controls were virtually non-existent, and those that did exist did not monitor for or protect against “wash trading” or self-dealing” it was stated.

This comes after it was recently reported that the assets of Celsius Network had been acquired through an auction.

Related: Wintermute moves over $4M of Optimism tokens to Binance ahead of OP unlock

On May 25, it was reported that crypto consortium Farhenheit was the successful bidder to acquire the assets of Celsius, previously valued at $2 billion.

The consortium obtained Celsius Network’s institutional loan portfolio, staked cryptocurrencies, mining unit and other alternative investments – which comes almost a year after Celsius initially filed for Chapter 11 bankruptcy, in July 2022.

Cointelegraph reached out to Wintermute for comment, but did receive a response by the time of publication.

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