Plaintiffs in a class action lawsuit have accused one of Celsius’ market makers of market manipulation, Bloomberg reported on June 23.
Wintermute accused of washing trade
Former Celsius investors said Wintermute engaged in washout trades to make Celsius appear to have higher trading volumes than it actually does.
The text of the case quoted by Bloomberg read:
“…The washout trading activity has corrupted CEL (Celsius) token prices, as well as reported trading volume, all in a strategic scheme to mislead investors.”
The plaintiffs also alleged that Wintermute helped Celsius CEO Alex Mashinksky prop up the value of Celsius’ CEL token after Terra and Luna collapsed.
The plaintiffs said they found details of Wintermute’s alleged wrongdoing through an anonymous report made by examiners prior to Celsius’ bankruptcy.
While the origins of the plaintiffs’ claims are unclear, market data indicates that on May 4, 2022 – days before the TerraUSD depeg – Celsius’ CEL token was priced at $2.18. The price of CEL fell to $0.28 on June 13, 2022, the same day Celsius stopped withdrawing. Its price then jumped to $3.81 in August 2022 before falling again.
The extent of Wintermute’s role as a market maker for Celsius is also unknown, although some reports suggest significant intercompany transactions. Arkham Intelligence reported that Celsius wallets moved $20 million worth of ETH to Wintermute in May 2023. Dirty Bubble Media reports suggests that Celsius transferred 2,000 WBTC to Wintermute just days before its bankruptcy in June 2022. CryptoSlate has not verified this data.
Wintermute denied any wrongdoing in a statement to Bloomberg.
The class action is not related to the bankruptcy case
Bloomberg said the lawsuit is Kaplan v. Mashinsky22-cv-04560, US District Court, District of New Jersey, otherwise known as Goines network c. Celsius.
Bloomberg said plaintiffs added Wintermute as a defendant in the amended case, although the latest update does not appear to be publicly available.
The case is separate from Celsius’ ongoing bankruptcy proceedings. Recent developments in its bankruptcy have seen Fahrenheit win an auction for Celsius’s assets, an event which marks the next step towards reopening the business and returning funds to creditors.
Celsius said it owed $5.5 billion to customers at the start of its July 2022 bankruptcy filing. Of that, it owed $4.7 billion to users.
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