(Bloomberg) -- Wintermute Trading Ltd., one of the biggest cryptocurrency market makers, was accused in a proposed class-action lawsuit of helping former Celsius Network Ltd. Chief Executive Officer Alex Mashinsky dupe investors in his now-bankrupt crypto lending firm.

Plaintiffs who sued Mashinsky and other Celsius executives in July 2022 amended their federal lawsuit in New Jersey this week to add London-based Wintermute as a defendant, entangling another major industry player in the fallout from Celsius’s collapse. 

According to the lawsuit, Wintermute engaged in “wash trading” — which creates the illusion that an asset is trading far more often than it actually is — and other improper activities starting in March 2021 to inflate the value of Celsius’s native CEL token and loan products. Wintermute also played a key role in Mashinsky’s futile effort to prop up CEL in May 2022 after the collapse of the Terra and Luna tokens, the investors alleged.

“This wash trading activity corrupted the CEL Token prices, as well as the reported trading volume, all in a strategic pattern to deceive investors,” lawyers for the investors said in the suit. 

Celsius froze all accounts on June 13, 2022, and filed for bankruptcy the next month amid a $2 trillion market crash that wiped out some of the industry’s biggest names and exposed hundreds of thousands of investors to steep losses.

“Wintermute strongly denies it has ever engaged in any improper trading,” a company spokesperson said in an email. 

Benjamin Allee, one of Mashinsky’s lawyers in the case, declined to comment on the amended suit. Mashinsky has previously denied wrongdoing in regards to the collapse of Celsius.

Crypto Turmoil

Wintermute, which also has offices in Singapore, had trading volume valued at $1.5 trillion and brought in $1.05 billion in revenue in 2021’s crypto bull market, according to a report by Forbes. 

Still, Wintermute was not immune to last year’s crypto turmoil. The firm had around $55 million of exposure of assets on FTX, Sam Bankman-Fried’s failed crypto exchange. And last September, it was hacked for about $160 million from its decentralized finance operations. 

Mashinsky’s woes widened in January when the New York attorney general sued him for allegedly duping hundreds of thousands of investors out of billions of dollars of cryptocurrency by making false and misleading statements about the lender’s safety. Wintermute isn’t accused of wrongdoing in that case.

This year, as some US trading firms retreat from crypto, Wintermute CEO Evgeny Gaevoy said his company is stepping up to grab more market share. “We are one of the very few companies out there that didn’t scale down magnificently and didn’t do any layoffs,” he said in an earlier interview.

While a report by an examiner who investigated Celsius ahead of its bankruptcy filing didn’t accuse Wintermute of wash trading, the plaintiffs say information in the report helped them establish the details of the alleged scheme.

“When deciding whether to trade in CEL Tokens, a reasonable investor would consider it important to know that the Executive Defendants and Wintermute were engaging in manipulative trading with respect to the CEL Tokens, and ensuring that the reported trading volumes reflected real market demand,” the investors said in the complaint.

Read More: Celsius Creditors Approved to Sue Crypto Firm Founder Mashinsky

The case is Kaplan v. Mashinsky, 22-cv-04560, US District Court, District of New Jersey.

(Updates with comment from Wintermute.)

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