Recently, creditors of the insolvent cryptocurrency loan company Celsius Network updated their complaint to accuse Wintermute, a significant cryptocurrency market maker, of taking part in a wash trading scheme. According to the claims, Wintermute and Celsius officials conspired to mislead investors by manipulating the price of CEL tokens through shady market trading.
Bloomberg reported recently that Celsius creditors had revised their case in the United States District Court of New Jersey, which claimed that Celsius management had engaged Wintermute in wash trading. The accusation was based on a recent court filing, which was referenced by Bloomberg. The complaint alleges that Celsius executives, including the CEO, Alex Mashinsky, devised a wash trading scheme, and that Wintermute participated in it.
In order to generate a misleading appearance of market activity, wash trading artificially inflates trading volumes. The creditors further asserted that Wintermute and Celsius executives acted “scienter” in relation to the alleged manipulative conduct.
The petition claims that the alleged conspiracy was discovered through “publicly available internal conversations” between executives, which showed Wintermute’s involvement in these erroneous market-making actions. And from about March 2021 through June 2022, when the lending platform stopped allowing withdrawals, the alleged partnership between Celsius officials and Wintermute allegedly lasted.
Due to investors’ inability to access their money during this time, the suspension of withdrawals increased existing suspicions about the site.Recent events, however, saw the $2 billion assets of Celsius Network being purchased in an auction by the cryptocurrency consortium Fahrenheit (the winning bidder). The acquired assets include of staked cryptocurrencies, mining shares, and other alternative investments from Celsius Network as well as its institutional lending portfolio.
A probable settlement for the struggling lending company is indicated by this transaction, which occurs nearly a year after Celsius first filed for Chapter 11 bankruptcy in July 2022. As the case develops, it will probably shed light on the bigger questions of market manipulation and investor protection inside the cryptocurrency ecosystem, highlighting the need for greater regulatory oversight and powerful control mechanisms to protect investors’ interests.