- Celsius creditors want to subpoena FTX records regarding large wallet holders.
- FTX debtors ignored previous requests.
- The dispute could resolve long-standing uncertainty about the companies’ relationship.
Celsius is preparing to take FTX to court to reveal the names of 10 large wallet holders suspected of manipulating the CEL price.
Creditors want to expose wallet holders allegedly involved in suspicious transactions that manipulated the CEL price shortly after Celsius stopped withdrawals.
Creditors Suspect CEL Token is Overvalued
After detecting 950 CEL transfers resembling washing between their own custody wallets and FTX wallets, creditors are seeking clarity on the legitimacy of the transactions.
The transfers allegedly occurred between April and August last year. Celsius seeks a court order to know whether these traders were involved in CEL price manipulation and caused the CEL token to be overvalued at 81 cents.
Crypto wash traders manipulate the price of a token 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 about short positions on CEL that could affect the token’s price. The token is currently worth 21 cents and is part of Celsius’ Chapter 11 bankruptcy plan.
FTX lawyers have not responded to requests to allow informal discovery.
Crypto lender Celsius filed for Chapter 11 bankruptcy in the Southern District of New York in July last year. Customers can collateralize loans, earn rewards, and make payments using CEL.
Court Filing Could Bring Closure to Celsius-FTX Relationship
Bitcoin writer Simon Dixon tweeted that Celsius’ court order regarding CEL price manipulation could finally resolve a complex relationship.
According to a blog post by investigative journalist Mike Burgersburg, FTX had previously allowed Celsius to manipulate the CEL price.
A report by Shoba Pillay alleged that Celsius inflated the CEL price by over 14,000% from March 2020 to June 2021 by buying too much CEL to pay rewards.
The Vermont securities regulator later claimed that Celsius bought 41.7 million CEL through FTX in 2021. The token increased the asset side of the company’s balance sheet by $1.5 billion in December 2021.
The CEL token in FTX wallets also increased by a similar amount.
As Celsius reduced its holdings, the CEL price fell and was thought to be supported only by the company’s purchases.
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