Wintermute Accused Of Enabling ‘Wash Trading’ By Celsius Creditors: Report

Wintermute, a prominent crypto market maker, has found itself embroiled in a legal controversy as creditors of the bankrupt cryptocurrency lending platform, Celsius, have made serious allegations against both entities.

According to a recent court filing mentioned in a Bloomberg report, Celsius creditors have amended their lawsuit in the United States District Court of New Jersey, claiming that Wintermute colluded with Celsius executives in manipulating the price of CEL, the platform’s native cryptocurrency, through illicit market trading practices.

These allegations have added another layer of complexity to the ongoing legal battle surrounding Celsius and its downfall.

Creditors Add Wintermute To Celsius Lawsuit

According to the report, the creditors claim that Wintermute collaborated with Celsius Network’s CEO, Alex Mashinsky, and other executives in engaging in illegal wash trading activities involving unregistered CEL Tokens.

Wash trading, a manipulative tactic, creates a false appearance of high trading volume for a particular asset, deceiving market participants. The creditors claim that Wintermute’s alleged involvement in such practices was part of a concerted effort by Celsius executives to unlawfully manipulate the market and profit from it.

Their lawsuit further contends that both the Celsius executives and Wintermute acted with “scienter,” meaning they knowingly and intentionally engaged in the manipulative acts that are being alleged.

The alleged scheme reportedly came to light through “publicly available internal conversations” among Celsius executives, according to the court filing. These conversations apparently provide evidence supporting the creditors’ claims of collusion and intentional manipulation by the involved parties.

Bitcoin approaches the $31K territory. Chart: TradingView.com

Price Volatility Raises Suspicion

Interestingly, CEL historical data reveals certain price fluctuations that coincide with the alleged wrongdoing. On May 4, 2022, just days before the de-pegging of TerraUSD, Celsius’ CEL token was reportedly priced at $2.18.

However, on June 13, 2022, the same day Celsius suspended withdrawals, the price of CEL plummeted to as low as $0.28. Subsequently, the token’s value experienced a surge to $3.81 in August 2022 before once again declining. The plaintiffs point to these volatile price movements as potential evidence supporting their claims.

It is worth noting that the ongoing case against Wintermute is distinct from the ongoing bankruptcy proceedings of Celsius. In May, it was revealed that Fahrenheit emerged as the winner in an auction for Celsius’ assets, marking a significant step toward the company’s reopening and the eventual return of funds to creditors.

Wintermute has responded to the allegations, vehemently denying any involvement in the purported wrongdoing. In a statement provided to Bloomberg, Wintermute asserts its innocence, refuting the accusations made by the plaintiffs.