Creditors of the bankrupt cryptocurrency lending platform Celsius have accused crypto market maker Wintermute of facilitating “wash trading” to manipulate the prices of CEL tokens. According to a recent lawsuit filed in the United States District Court of New Jersey, it is alleged that Celsius executives engaged Wintermute to conduct “fraudulent” wash trading to artificially inflate trading volumes on the Celsius platform.
Wintermute, described as a “purported market maker in the crypto industry,” allegedly aided Celsius CEO and other executives in “unlawfully manipulating and profiting from the illegal wash trading of unregistered CEL Tokens.” The filing stated that the alleged scheme involving Wintermute to “wash trade CEL tokens to influence the price” was uncovered through “publicly available internal conversations” among Celsius executives.
Celsius creditors further claimed that Celsius executives engaged Wintermute in these “improper market making” activities from around March 2021 up until Celsius froze withdrawals in June 2022. It was noted that Celsius had no measures in place to prevent improper market making. The filing stated that “the supposed controls were virtually non-existent, and those that did exist did not monitor for or protect against wash trading or self-dealing.”
It is worth highlighting that Celsius Network had once been valued at $2 billion, before filing for Chapter 11 bankruptcy in July 2022. Crypto consortium Fahrenheit acquired the assets of Celsius, including the institutional loan portfolio, staked cryptocurrencies, mining unit, and other alternative investments. Wintermute has not provided any official statement regarding the allegations at the time of writing.
This recent case brings attention to the potential manipulation of trading volumes in the cryptocurrency market and raises questions about the transparency and accountability of market participants. While the technology driving these platforms is rapidly evolving, the regulatory landscape is still catching up, leaving room for exploitation. Thus, it is crucial for market players to promote trust and transparency in the industry, and for regulators to address potential market manipulation and ensure the safety and stability of the market for all participants.
Source: Cointelegraph
