A new twist has emerged in the saga of the now-bankrupt crypto lending firm, Celsius Network.
The crypto lender's creditors have reportedly claimed that the company's executives partnered with Wintermute, a cryptocurrency market maker, to manipulate Celsius's token (CEL) price through illicit trading practices.
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The documents were filed in the United States District Court for the District of New Jersey, alleging that Celsius executives enlisted Wintermute to engage in wash trading - a manipulative trading strategy that gives the false impression of high trading volumes for a specific asset.
The lawsuit claims that Wintermute, alongside Celsius CEO Alex Mashinsky and other key executives, engaged in manipulative activities that artificially bloated the trading volume of the unregistered CEL tokens.
The executives and Wintermute are accused of knowingly participating in these deceptive acts.
Defendant Wintermute and the Executive Defendants engaged in a scheme that artificially inflated the trading volume of the CEL tokens sold and marketed by Celsius.
The alleged conspiracy and price manipulation were reportedly discovered through a series of "publicly available internal conversations" among Celsius's executives.
The filing raises concerns about the company's regulatory safeguards, alleging that Celsius lacked adequate controls to prevent such market manipulation. Based on the court documents, Celsius controls couldn't detect or prevent wash trading or self-dealing.
The supposed controls were virtually non-existent, and those that did exist did not monitor for or protect against “wash trading” or self-dealing.
The development comes hot on the heels of news about Celsius's assets purchase at an auction. On May 25th, it was announced that crypto consortium Fahrenheit won the bidding to acquire the assets of Celsius, previously valued at an impressive $2 billion.
The unfolding events surrounding the allegations leveled against Celsius and Wintermute underscore the critical importance of maintaining transparency and upholding regulatory compliance within the rapidly evolving crypto landscape.
