Wintermute Trading Accused Of Helping Celsius CEO Scam Investors: Report

Key Points:

• Wintermute Trading Ltd. is accused of aiding in a fraudulent scheme with Celsius Network Ltd. CEO Alex Mashinsky.
• According to the lawsuit, the firm engaged in “wash trading” and other improper activities.
• The investors claim that Wintermute played a critical role in Mashinsky’s failed attempt to prop up CEL in May 2022.

Wintermute Trading Ltd., one of the biggest cryptocurrency market makers, was accused in a proposed class-action lawsuit of helping former Celsius Network Ltd. Chief Executive Officer Alex Mashinsky dupe investors in his now-bankrupt crypto lending firm.

Wintermute Trading Ltd, one of the largest cryptocurrency market makers, has been accused of aiding in a fraudulent scheme alongside former Celsius Network Ltd. CEO Alex Mashinsky. The accusations stem from a proposed class-action lawsuit, where plaintiffs sued Mashinsky and other Celsius executives in July 2022. This week, the plaintiffs amended their federal lawsuit in New Jersey to include Wintermute as a defendant, further entangling another significant industry player in the fallout from Celsius’s collapse.

The lawsuit alleges that starting in March 2021, Wintermute engaged in “wash trading” and other improper activities, artificially inflating the value of Celsius’s native CEL token and loan products. The investors also claim that Wintermute played a critical role in Mashinsky’s failed attempt to prop up CEL in May 2022 after the Terra and Luna tokens collapsed.

Celsius froze all accounts on June 13, 2022, and filed for bankruptcy the following month amid a market crash that caused significant losses to investors. The lawsuit alleges that Wintermute’s “wash trading” activities corrupted the CEL token prices and reported trading volumes, which deceived investors.

Defendants’ statements about compliance and trading volumes were material to investors trading in the CEL Tokens and on the Celsius platform. When deciding whether to trade in CEL Tokens, a reasonable investor would consider it important to know that the Executive Defendants and Wintermute were engaging in manipulative trading with respect to the CEL Tokens, and ensuring that the reported trading volumes reflected real market demand based on arm’s length transactions operating under legitimate market principles.

Investors said in the complaint

Wintermute has denied any wrongdoing in relation to the allegations. A company spokesperson stated in an email, “Wintermute strongly denies it has ever engaged in any improper trading.” Benjamin Allee, one of Mashinsky’s lawyers in the case, declined to comment on the amended lawsuit. Mashinsky has previously denied any wrongdoing regarding the collapse of Celsius.

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