Celsius's $3.3B "Audit" Sticks Around Longer Than Its Withdrawals 📊

A US federal judge has dismissed most claims in a lawsuit brought against blockchain analytics firm Chainalysis by Celsius Network's litigation administrator, but allowed a single aiding-and-abetting claim to survive. US District Judge Margaret Garnett denied Chainalysis' motion to dismiss that claim in a Tuesday ruling, finding the complaint sufficiently alleged Chainalysis knew a 2020 Celsius press release contained false statements and helped disseminate them. The judge dismissed 12 other claims with prejudice, barring the plaintiffs from amending them in this case, while three consumer-protection claims were dismissed without prejudice. The plaintiffs have until Oct. 20 to amend those three claims or notify the court they will not do so.

The surviving claim centers on a December 9, 2020 Celsius press release announcing an "audit" confirming roughly $3.3 billion in Celsius assets using Chainalysis Reactor, based on transactions, total deposits and total withdrawals since Celsius launched the service in 2018. According to the complaint as summarized by the court, a Celsius executive initially calculated about $1.18 billion in assets using Reactor before changes to the methodology increased the figure to roughly $3.3 billion. The complaint alleges Chainalysis helped draft, edit and approve the release and knew that statements describing the work as an "audit" and "independent verification" were false or materially misleading. The allegations have not been proven, and Chainalysis sought dismissal of the complaint in its entirety.

Celsius, a crypto lender, filed for bankruptcy in July 2022 during the crypto market crash after freezing withdrawals a month earlier, leaving customers unable to access about $4.7 billion in assets. The Chainalysis lawsuit is part of the estate's effort to recover funds for creditors and was brought by the Blockchain Recovery Investment Consortium, or BRIC, which acts as litigation administrator and recovery manager for the Celsius estate and is pursuing claims on behalf of Celsius and certain former customers. Chainalysis told Cointelegraph it was unable to comment, and Celsius' litigation administrator had not responded before publication.