Investors accuse Wintermute of facilitating Celsius wash trading

A group of crypto investors has accused Wintermute Trading Ltd., a leading cryptocurrency market maker, of colluding with bankrupt crypto lender Celsius Digital and its former chief executive Alex Mashinsky to deceive them.

According to a Bloomberg report, a group of Celsius investors who initially filed a lawsuit against former CEO Alex Mashinsky and several of the company’s top executives in July 2022 has amended the lawsuit to include Wintermute.

The investors claim the London-based liquidity provider engaged in “wash trading” and other improper activities to inflate the value of Celsius’s native token, CEL, and its loan products.

Wash trading occurs when traders repeatedly buy and sell the same asset to create artificial trading volume and price movements. Per the lawsuit, Wintermute collaborated with Alex Mashinsky, the former CEO of Celsius, to use wash trading to boost the demand and price of CEL in March 2021. The lawsuit also accuses Wintermute of assisting Mashinsky in his attempt to prop up CEL in May 2022 after the collapse of Terra and Luna tokens.

Celsius was one of the largest crypto lending platforms in the industry, with over one million users and $17 billion in assets under management. However, the company filed for bankruptcy in June 2022 following a $2 trillion market crash that wiped out many crypto firms and exposed investors to huge losses.

Wintermute denies accusations

Bloomberg wrote that while Wintermute has “strongly” denied engaging in improper trading of any sort, Alex Mashinsky’s legal representatives have refused to comment on the new accusations brought against their client.

Celsius froze all accounts on June 13, 2022, and Mashinsky has been under investigation by the New York attorney general for allegedly making false and misleading statements about his company’s financial health and security, leading investors to lose billions of dollars in crypto assets.

Following a public auction, Fahrenheit’s crypto consortium acquired Celsius’s assets, including mining equipment, staked cryptocurrencies, an institutional loan portfolio, and other alternative investments.

On its part, Wintermute, which reported $1.05 billion in revenue and $1.5 trillion in trading volume in 2021, has faced some challenges in recent times, including a $160 million hack in September 2022 and a $55 million exposure to Sam Bankman-Fried’s failed FTX crypto exchange.