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In: Cryptocurrency

Creditors of Celsius Network LLC have <a href="https://www.bloomberg.com/news/articles/2023-04-26/celsius-creditors-seek-to-unmask-suspicious-ftx-crypto-trades#xj4y7vzkg” target=”_blank” rel=”noopener nofollow”>requested the assistance of a bankruptcy judge to uncover the identities of FTX users. The creditors believe these individuals were engaged in “questionable cryptocurrency transactions” that potentially influenced the value of Celsius’ proprietary token in the previous year.

Celsius Network is looking to subpoena primarily to extract information about particular users who might have records for “suspicious” trading activities throughout the last year. The creditors aim to obtain information regarding 10 cryptocurrency wallets associated with suspicious trades of Celsius’ CEL coin between April and August.

The trades in question could hold a significant value for Celsius Network’s bankruptcy case as some were executed when the platform halted withdrawals and before the filing of Chapter 11 bankruptcy.

This makes it crucial for the creditors to obtain information on the users involved in the trades to investigate if they manipulated the price of CEL, causing losses for Celsius Network.

The committee enlisted the services of blockchain consultant Elementus to identify suspicious transactions. On April 26, the request for subpoenas was submitted in court documents.

The filing stated:

Elementus identified 947 transactions involving a near one-to-one relationship of CEL Token deposits and withdrawals between ten private wallets and ten FTX-operated wallets over three days.

Additional Information Sought By Celsius Network

Determining whether the trades involving CEL were executed to inflate its price artificially is crucial for the committee representing Celsius Network’s creditors. They have stated that the information they seek from FTX is necessary to prove their case.

Apart from the information on suspicious trades, the committee is also seeking details on any short positions taken on CEL, which might have affected its price negatively, per court documents.

The creditors think that determining the legitimacy of the trades is crucial as it could aid in resolving a dispute related to Celsius Network’s bankruptcy. The filing also stated:

The Subpoenas request information on the identities and user accounts of the entities or individuals associated with the Identified FTX Wallets, any other FTX user accounts that those individuals or entities had, the complete transaction history of all the user accounts identified for those individuals or entities, the identities and user accounts of the entities or individuals associated with all short positions with respect to CEL Tokens on the FTX Exchange from April 1, 2022, to August 30, 2022.

Celsius Network’s current bankruptcy plan values CEL at 20 cents on the petition date. However, the creditors have disputed this value, citing the suspicious trades that might have artificially manipulated the token’s price.

Collapsed crypto exchange FTX is selling LedgerX, its futures and options exchange, and clearinghouse, to an affiliate of Miami International Holdings for about $50 million. The deal awaits approval from the US Bankruptcy Court for the District of Delaware, with a hearing set for May 4.

Bitcoin was priced at $29,300 on the one-day chart | Source: BTCUSD on TradingView

Featured Image From Reuters, Chart From TradingView.com

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