Wintermute accused of facilitating ‘wash trading’ by Celsius creditors.

Creditors of the bankrupt cryptocurrency lending platform Celsius Network are accusing Wintermute, a crypto market maker, of assisting Celsius executives in manipulating the price of Celsius (CEL) through improper market trading.

A recent court filing in the United States District Court for the District of New Jersey alleges that Celsius executives engaged Wintermute in wash trading, a form of market manipulation that creates the illusion that a particular asset is trading at a higher volume than it actually is.

The creditors claim that Celsius CEO Alex Mashinsky and other executives unlawfully manipulated and profited from the illegal wash trading of unregistered CEL Tokens with Wintermute’s assistance. According to the filing, the alleged scheme was uncovered through publicly available internal conversations between Celsius executives. The scheme was carried out from around March 2021 until the Celsius froze withdrawals in June 2022.

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.

Recently, it was reported that Celsius’s assets had been acquired through an auction by crypto consortium Fahrenheit. The consortium obtained Celsius Network’s institutional loan portfolio, staked cryptocurrencies, mining unit, and other alternative investments. This comes almost a year after Celsius initially filed for Chapter 11 bankruptcy in July 2022.

Wintermute has not yet responded to requests for comment.

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