Celsius is to subpoena FTX to reveal the names of the 10 largest wallet holders suspected of CEL price manipulation.
Creditors want FTX to unmask wallet holders who allegedly manipulated CEL’s price through suspicious trades shortly after Celsius paused withdrawals.
Creditors Suspect CEL Token Overvalued
The creditors seek clarity on the trades’ legitimacy after identifying 950 CEL transfers resembling wash trading between self-custodial and FTX wallets.
The trades reportedly occurred between April and August last year. The Celsius court order wants to know if these traders engaged in CEL price manipulation, making the CEL token overvalued at 81 cents.
Crypto wash traders manipulate a token’s price by buying and selling it through multiple accounts or exchanges. These transfers inflate the token’s trading activity and distort its true value.
Celsius creditors also want information on short positions on CEL that could have affected the token’s price. The token is currently valued at 21 cents and is part of Celsius’s Chapter 11 bankruptcy plan.
FTX lawyers did not respond to requests to permit to commence an informal discovery.
Crypto lender Celsius filed for Chapter 11 bankruptcy in the Southern District of New York last July. Customers could collateralize loans, earn rewards, and make payments using CEL.
Court Filing Could Bring Closure on Celsius-FTX Relationship
Bitcoin author Simon Dixon tweeted that the Celsius court order regarding CEL price manipulation may finally resolve a complicated relationship.
According to a blog post by investigative journalist Mike Burgersburg, FTX had previously enabled Celsius itself to manipulate CEL’s price
A report by examiner Shoba Pillay alleged in January that Celsius inflated the price of CEL by over 14,000% from March 2020 to June 2021 by buying more CEL than was needed to pay out rewards.
Vermont’s securities regulator later suggested that Celsius bought 41.7 million CEL through FTX in 2021. The token inflated the assets side of the company’s balance sheet by $1.5 billion in December 2021.
The CEL token in FTX wallets reportedly increased by a similar amount around the same time.
As Celsius reduced its accumulation, the price of CEL fell, suggesting that only the company’s purchases propped up the coin.
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