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Celsius Creditors Seek to Uncover FTX Users Involved in Crypto Trading Controversy

The allegations stem from ten cryptocurrency wallets allegedly involved in suspicious trades of Celsius’ native token

Celsius Network, a well-known cryptocurrency lending platform, is currently facing allegations of market manipulation by its creditors.

The allegations stem from ten cryptocurrency wallets allegedly involved in suspicious trades of Celsius’ native token, CEL, between April and August of 2022.

A committee representing Celsius creditors has requested a bankruptcy judge to subpoena FTX for information that could help identify users behind these wallets.

The creditors suspect that these FTX users may have manipulated the price of CEL through these trades, which could have serious legal consequences.

The committee has hired blockchain consultant Elementus Inc. to investigate the matter and determine whether the trading was legitimate or a form of market manipulation.

Elementus Inc. has identified 947 transactions over three days “involving a near one-to-one relationship” between CEL token deposits and withdrawals between the ten private crypto wallets and wallets on the FTX exchange.

If the trades are found to be illegitimate, it could significantly impact Celsius Network’s reputation and the ongoing bankruptcy proceedings.

The company is currently valuing the CEL coin at 20 cents in its proposed Chapter 11 plan, arguing that the 81-cent price when Celsius went bankrupt was not an accurate reflection of the token’s fair market value.

The committee has requested permission to issue the subpoenas after FTX has not agreed to engage in informal discovery, according to Bloomberg’s report.

Celsius’ bankruptcy proceedings have attracted new bidders, including Fahrenheit LLC, a consortium backed by Techcrunch Inc. founder Michael Arrington, and Blockchain Recovery Investment Committee, backed by Gemini Trust, run by the Winklevoss twins, and exchange-traded fund manager Van Eck Absolute Return Advisers Corporation.

The official committee of Celsius creditors has won court approval to assert claims, including fraud and negligent misrepresentation, against the failed crypto lender on behalf of its account holders.

Since the company filed for bankruptcy in July with a $1.19 billion deficit, allegations of fraud and misrepresentation have plagued the network.

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Judith Faith has been writing about cryptocurrencies and blockchain technology for over five years. She is well versed in the industry and has an extensive network of industry contacts. She is also a frequent contributor to various cryptocurrency publications. With her vast knowledge and experience, she is able to provide insightful and valuable content to her readers. Judith is also an active investor in the cryptocurrency space and has a vested interest in the success of the industry.