Celsius Network LLC creditors want a bankruptcy judge to help them unmask FTX users they allege were involved in suspicious cryptocurrency trades that may have manipulated the price of Celsius’ native token last year.
(Bloomberg) — Celsius Network LLC creditors want a bankruptcy judge to help them unmask FTX users they allege were involved in suspicious cryptocurrency trades that may have manipulated the price of Celsius’ native token last year.
A committee representing Celsius creditors on Wednesday asked a bankruptcy judge for permission to subpoena FTX for information to identify users behind ten cryptocurrency wallets they say engaged in a pattern of suspicious trades of Celsius’ so-called CEL coin between April and August.
Celsius creditors said they need the FTX user information to determine whether the trading was legitimate “or instead a form of market manipulation, such as wash trading,” according to court papers filed Wednesday.
The committee said it retained blockchain consultant Elementus Inc., which identified 947 transactions over a three-day period “involving a near one-to-one relationship” between CEL token deposits and withdraws between the ten private crypto wallets and wallets on the FTX exchange.
The CEL trades in question occurred between the date Celsius paused customer withdrawals on June 12 and the company’s Chapter 11 filing on July 13, when the price of the token was 81 cents, according to court documents.
The committee said the information it seeks could determine if the trades were meant to artificially inflate the CEL token. Conversely, the committee also seeks information about short positions taken in the CEL token on FTX, which could have negatively impacted the price of the token.
Determining whether the trades were legitimate could prove important to a dispute in Celsius’ bankruptcy. The company is valuing the CEL coin at 20 cents in its proposed Chapter 11 plan, arguing the 81 cent price at the time Celsius went bankrupt was not an accurate reflection of the token’s fair market value.
The committee said it sought permission to issue the subpoenas after contacting FTX’s lawyer on April 10 but said so far FTX has “not agreed to engage in informal discovery.”
FTX didn’t immediately return a message seeking comment.
The bankruptcy is Celsius Network LLC, 22-10964, US Bankruptcy Court for the Southern District of New York (Manhattan).
–With assistance from Olga Kharif.
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