Celsius Creditors Claim Execs Used Wintermute For ‘Wash Trading’

June 27, 2023

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As per a recent report by Bloomberg, creditors of Celsius, the bankrupt cryptocurrency lending platform, have recently updated the complaint they filed in the United States District Court for the District of New Jersey to claim that cryptocurrency marketplace Wintermute was connected with Celsius executives to manipulate the price of Celsius through fraudulent market transactions.

Wintermute Allegedly Involved in Illegal Wash Trading

In particular, Wintermute is accused of helping Celsius CEO Alex Mashinsky and other executives to “unlawfully manipulate and profit from the illegal wash trading of unregistered CEL Tokens.” The creditors claimed that Wintermute and the management of Celsius engaged in “scienter in connection with the manipulative acts alleged.“ It is important to note the statement in the filing which reads:

“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.”
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Additionally, the complaint states that Celsius management used Wintermute in these “improper market making” operations from about March 2021 “until the Celsius frozen withdrawals in June 2022.”

Wash Trading

Wash trading is the practice of reselling and repurchasing tokens. This practice is frequently used by several cryptocurrency exchanges to boost site traffic and attract prospective customers. Due to the high market rivalry and the continual expansion of new platforms, wash trading encompasses the exchange of digital assets on trading platforms, such as fungible or non-fungible tokens. Interestingly, any number of accounts may be opened and used for this purpose by the trader. As a result, the asset’s price would go up. The primary objective is to deceive other traders into thinking there is a high demand for the asset.

A research carried out in December of last year by the blockchain analytics firm Dune found that wash transactions accounted for around 60% of the non-fungible token (NFT) trade volumes for the year, as TheCoinRise reported. Additionally, approximately 51% of the projected Bitcoin trading volume is “bogus” and invalid, according to a Forbes research.