Creditors of the bankrupt lending firm Celsius have recently amended their lawsuit to include Wintermute, alleging that the trading firm assisted Celsius in engaging in wash trading. This new development in the ongoing class-action lawsuit filed against Celsius provides an additional layer of complexity, as it implicates not only the crypto lending firm but also the algorithmic trading firm in improper market making activities.
The court filing alleges that from around March 2021 until June 2022, Celsius executives, including CEO Alex Mashinsky, engaged in wash trading with the assistance of Wintermute. Wash trading is an illegal activity involving the simultaneous selling and buying of a single security or cryptocurrency to create misleading market information. This accusation directly impacts those who incurred losses after purchasing Celsius Financial Products via a Celsius Earn Rewards Account and subsequently filed a lawsuit against the firm.
These alleged wash trading activities were discovered through publicly available internal conversations held between Celsius executives. Prior to filing for bankruptcy, Celsius reportedly transferred nearly $160 million worth of wrapped Bitcoin to third-party wallets, with several of these addresses reportedly being controlled by Wintermute. Additionally, Celsius is said to have moved approximately $20 million worth of WETH into a Wintermute wallet in May, according to blockchain intelligence firm Arkham.
The implications of this latest amendment in the lawsuit are not only restricted to the involved parties but also raise questions about the transparency, trust, and safety within the blockchain and cryptocurrency markets. The revelation of these allegations may ignite both skepticism and concern among investors and enthusiasts, as well as amplify the ongoing discussions surrounding the need for increased regulation and oversight in the crypto space.
Despite the controversy, crypto consortium Fahrenheit has already acquired Celsius’ assets, previously valued at $2 billion. The deal includes Celsius Network’s staked cryptocurrencies, mining unit, institutional loan portfolio, and other alternative investments. As per the agreement, Fahrenheit will receive a significant amount of liquid cryptocurrency, estimated to be between $450 million and $500 million.
The outcome of this lawsuit could potentially set a precedent for similar cases and further emphasize the importance of regulatory compliance, transparency, and the protection of investors in the fast-growing world of cryptocurrency. While the future remains uncertain for the individuals and companies involved, the ongoing class-action lawsuit serves as a cautionary tale and a vital reminder of the risks and challenges that can emerge in the constantly evolving landscape of blockchain and crypto-related businesses.
Source: Cryptonews
