Celsius Creditors Accuse Wintermute of Manipulating CEL Token in Wash Trading Scheme

News | June 26, 2023 By:

Celsius creditors have raised additional allegations of wash trading against Wintermute, a prominent cryptocurrency market maker, according to an amended lawsuit filed on June 19, 2023, in the United States District Court for the District of New Jersey.

The ongoing legal battle, initiated by several creditors of bankrupt cryptocurrency lending platform Celsius Network, has been updated to include claims that Wintermute manipulated CEL token prices through wash trading. Wash trading involves the execution of simultaneous buy and sell orders to create a false impression of trading activity.

“Most notably, from at least March 2021 up until Celsius froze withdrawals on June 12, 2022, the Executive Defendants actively engaged Defendant Wintermute to engage in improper market making via the use of wash trading,” said the amended lawsuit. “Defendant Wintermute and the Executive Defendants engaged in a wash trading scheme that artificially inflated the trading volume of the CEL Tokens sold and marketed by Celsius.”

If proven true, these allegations could significantly impact the trust and credibility of the cryptocurrency market, specifically concerning the CEL token.

The creditors argue that such manipulative actions can undermine price discovery mechanisms, deceive investors, and potentially harm those involved. As part of the ongoing legal proceedings, they are calling for a thorough investigation into the alleged manipulation of CEL tokens.

“Volume is important for investors in evaluating prices (including anticipated price movement), market activity (including demand and available liquidity), and market efficiency,” the lawsuit said. “Defendants’ scheme depended heavily on Class members believing that the CEL Token prices, trading, and reported liquidity were not tainted by fraud.”

Both Celsius and Wintermute have yet to formally respond to the specific allegations outlined in the lawsuit. However, they have reiterated their commitment to transparency and adherence to regulatory standards. They express confidence in their ability to address the concerns raised by the creditors and the wider cryptocurrency community.

Regulatory authorities and industry watchdogs are closely monitoring the situation, recognizing the potential implications for investor protection and market stability. If the allegations are substantiated, it could result in regulatory actions and increased scrutiny of market participants to prevent manipulative practices.

Safeguarding the integrity and trustworthiness of the cryptocurrency market is crucial as the industry continues to evolve. Detecting and addressing instances of misconduct is vital to ensure the long-term viability and acceptance of cryptocurrencies, including the CEL token. The outcome of this lawsuit will likely have broader implications for the cryptocurrency industry’s regulatory framework and investor confidence.

A copy of the original filing can be found here.