Wintermute Accused Of Deception In Celsius Collapse

Wintermute Trading Ltd., a prominent cryptocurrency market maker, has been added as a defendant in a proposed class-action lawsuit accusing them of colluding with former Celsius Network Ltd. CEO Alex Mashinsky to deceive investors in the now-bankrupt crypto lending firm. Plaintiffs who initially sued Mashinsky and other Celsius executives have amended their federal lawsuit in New Jersey to include Wintermute, entangling another major player in the aftermath of Celsius’s collapse.

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. BBG…

— Wu Blockchain (@WuBlockchain) June 24, 2023

The lawsuit alleges that Wintermute engaged in “wash trading” and other improper activities, starting in March 2021, to inflate the value of Celsius’s native CEL token and loan products. The investors claim that Wintermute’s actions corrupted the CEL Token prices and trading volume, creating a strategic pattern to deceive investors. Celsius froze all accounts in June 2022 and filed for bankruptcy the following month, following a market crash that wiped out significant industry names and exposed investors to substantial losses.

Wintermute vehemently denies any involvement in improper trading, according to a company spokesperson. Mashinsky’s lawyer declined to comment on the amended suit, while Mashinsky himself has previously denied any wrongdoing related to Celsius’s collapse.

Despite Wintermute’s strong performance during the crypto bull market in 2021, with a trading volume valued at $1.5 trillion and revenue of $1.05 billion, the company faced challenges during the crypto turmoil. It suffered a $55 million exposure on FTX, the failed crypto exchange owned by Sam Bankman-Fried, and was hacked for approximately $160 million from its decentralized finance operations in September of the same year.

In January, Mashinsky faced further legal trouble when the New York attorney general sued him for allegedly defrauding investors out of billions of dollars of cryptocurrency by making false and misleading statements about the safety of Celsius. However, Wintermute is not implicated in that particular case.

Wintermute’s CEO, Evgeny Gaevoy, has expressed the company’s commitment to increasing market share as other US trading firms retreat from the crypto sector. While an examiner’s report investigating Celsius prior to its bankruptcy filing did not directly accuse Wintermute of wash trading, the plaintiffs argue that information in the report helped establish the details of the alleged scheme.

The investors emphasize the importance of transparency and real market demand for CEL Tokens, stating that a reasonable investor would consider it crucial to know about the manipulative trading activities involving Wintermute and the Celsius executives before making trading decisions.