Celsius investors allege Wintermute took part in wash trading, price manipulation

Plaintiffs in a class action lawsuit have accused one of Celsius’s market makers of market manipulation, Bloomberg reported on June 23.

Wintermute accused of wash trading

Former Celsius investors said that Wintermute engaged in wash trading to make it appear that Celsius had higher trading volumes than it did in reality.

The case text quoted by Bloomberg said:

” … Wash trading activity corrupted [Celsius’] CEL Token prices, as well as the reported trading volume, all in a strategic pattern to deceive investors.”

The plaintiffs also alleged that Wintermute helped Celsius CEO Alex Mashinksky support the value of Celsius’s CEL token following the collapse of Terra and Luna.

Plaintiffs said that they found details of Wintermute’s alleged wrongdoing through an unnamed report carried out by examiners prior to Celsius’ bankruptcy.

While the origins of the plaintiffs’ claims are unclear, market data indicates that on May 4, 2022 — days prior to TerraUSD’s depeg — Celsius’ CEL token was priced at $2.18. The price of CEL fell as low $0.28 on June 13, 2022, the same day that Celsius halted withdraws. Its price then surged to $3.81 in August 2022 before falling once again.

The extent of Wintermute’s role as a market maker for Celsius is also unknown, though some reports suggest large transactions between firms. Arkham Intelligence reported that Celsius’ wallets transferred $20 million of ETH to Wintermute in May 2023. Reports from Dirty Bubble Media suggest that Celsius transferred 2,000 WBTC to Wintermute just days before its June 2022 bankruptcy. CryptoSlate has not verified that data.

Wintermute denied all wrongdoing in a statement to Bloomberg.

Class action is unrelated to bankruptcy case

Bloomberg said that the lawsuit is Kaplan v. Mashinsky, 22-cv-04560, US District Court, District of New Jersey, otherwise known as Goines v. Celsius Network.

Bloomberg said that the plaintiffs have added Wintermute as a defendant in the amended case, though the latest update does not appear to be publicly available.

The case is separate from Celsius’ ongoing bankruptcy proceedings. Recent developments in its bankruptcy saw Fahrenheit win an auction for Celsius’ assets, an event that marks the next step toward the company reopening and returning funds to creditors.

Celsius said that it owed $5.5 billion to customers near the beginning of its bankruptcy case in July 2022. Of that amount, it owed $4.7 billion to users.

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