Celsius Creditors Seek Info From FTX Over Suspicious CEL Trades

  • The trades are believed to have manipulated the price of Celsius’ native token CEL.
  • The creditors are seeking the details of the users behind the FTX wallets that executed the CEL trades.

Creditors of the defunct crypto lender Celsius Network are looking to issue a subpoena to FTX in order to extract info about the bankrupt crypto exchange’s users who participated in a series of suspicious trades last year. The trades involved Celsius’ native token CEL, which is one of the cryptocurrencies at the center of the lender’s ongoing bankruptcy case.

According to a report by Bloomberg, the Celsius Official Committee of Unsecured Creditors entered an application in the U.S. Bankruptcy Court for the Southern District of New York, seeking the bankruptcy judge’s permission to issue subpoenas to FTX debtors for information regarding the users behind the wallets that executed the trades in question.

The Creditors Committee had reportedly retained the services of blockchain consultant Elementus Inc, which identified 947 suspicious transactions from last year. The transactions involved a “near one-to-one relationship” between CEL token deposits and withdrawals between 10 private crypto wallets and wallets on FTX.

The suspicious CEL trades reportedly occurred between April and August 2022. Incidentally, Celsius paused customer withdrawals and filed for Chapter 11 bankruptcy during this period. Its creditor committee believes that the trades made by FTX users may have manipulated the price of CEL during this period.

The subpoena to FTX would help extract information that will allow the creditors to determine if the trades were made to artificially pump CEL. The creditors’ committee will also be able to determine the negative impact of any short trades executed during the concerned period.

The issue carries considerable significance because it will determine the repayment to Celsius’ creditors. The bankrupt crypto lender valued the CEL tokens at 20 cents in its bankruptcy plan. However, the creditors believe that this is an unfair valuation since the potential manipulation hasn’t been accounted for.

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