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Creditors of bankrupt cryptocurrency lending platform Celsius Network have alleged that crypto market maker Wintermute assisted Celsius executives in manipulating the price of Celsius (CEL) through improper market trading.
According to a June 23 Bloomberg report, which cited a recent court filing, Celsius creditors have recently amended their lawsuit in the United States District Court for the District of New Jersey to allege that Celsius executives engaged Wintermute to take part in wash trading.
Wash trading is a form of market manipulation that creates the illusion that a particular asset is trading at a higher volume than it actually is.
Wintermute allegedly aided Celsius CEO Alex Mashinsky and other executives to “unlawfully manipulate and profit from the illegal wash trading of unregistered CEL Tokens.“
The creditors alleged that both the Celsius executives and Wintermute acted with “scienter in connection with the manipulative acts alleged.“
“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.”
According to the filing, the alleged scheme was uncovered through “publicly available internal conversations” between Celsius executives.
It was further claimed that Celsius executives engaged Wintermute in these “improper market making” activities from around March 2021 “until the Celsius froze withdrawals in June 2022.”
It was reported that Celsius had no measures in place to prevent improper market-making.
“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 was stated.
This comes after it was recently reported that Celsius’s assets had been acquired through an auction.
Related: Wintermute moves over $4M of Optimism tokens to Binance ahead of OP unlock
On May 25, it was reported that crypto consortium Fahrenheit was the successful bidder to acquire the assets of Celsius, previously valued at $2 billion.
The consortium obtained Celsius Network’s institutional loan portfolio, staked cryptocurrencies, mining unit and other alternative investments, which comes almost a year after Celsius initially filed for Chapter 11 bankruptcy in July 2022.
Cointelegraph reached out to Wintermute for comment but did not receive a response by publication.
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