Celsius Lawsuit Against Chainalysis Narrows as One Claim Survives

A US federal judge has dismissed most claims brought against Chainalysis by Celsius Network’s litigation administrator, but allowed one to proceed.

The surviving claim alleges Chainalysis helped Celsius insiders breach their fiduciary duties.

US District Judge Margaret Garnett denied Chainalysis’ bid to dismiss the aiding-and-abetting claim in a ruling issued Tuesday. She found that the complaint sufficiently alleged that Chainalysis knew a 2020 Celsius press release contained false statements and helped disseminate them.

The judge dismissed 12 other claims with prejudice, preventing the plaintiffs from amending them in this case.

Three consumer-protection claims were dismissed without prejudice. The plaintiffs have until Oct. 20 to amend those claims or tell the court they will not do so.

Celsius, a crypto lender, filed for bankruptcy in July 2022 during the crypto market crash. It froze 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.

Chainalysis told Cointelegraph it was unable to comment. Celsius’ litigation administrator had not responded before publication.

Celsius lawsuit centers on $3.3 billion “audit”

In 2020, Celsius enlisted Chainalysis to help calculate its assets under management using the company’s Reactor software and later publicized the results as an audit.

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.

A Dec. 9, 2020 press release announced an “audit” confirming about $3.3 billion in Celsius assets using Chainalysis Reactor, based on transactions, total deposits and total withdrawals since Celsius launched the service in 2018.

Related: Federal prosecutors blast ex-Celsius CEO’s motion to vacate as ‘without merit’

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 to have the complaint dismissed in its entirety.

Blockchain Recovery Investment Consortium, or BRIC, brought the lawsuit. It acts as litigation administrator and recovery manager for the Celsius estate and is pursuing claims on behalf of Celsius and certain former customers.

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